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What the telcos, stakeholders & others are saying about 2016 spectrum auctions


India’s 2016 spectrum auctions concluded last week after 5 days and 31 rounds of bidding. Several participating operators have issued statements explaining what and how they plan to use the newly acquired spectrum. Note that only 965 MHz of the total 2,354.55 MHz of spectrum was sold, which is around 40%. Select quotes from various stakeholders and analysts (more in the links):

On 700 Mhz, pricing and re-auction:

Telecom minister Manoj Sinha: “If their financial situation is not good, and they can’t buy it now, what is the guarantee that they will be able to if we do another auction immediately”. More at TechCircle.
– Sunil Bharti Mittal, Chairman of Bharti Airtel: “We missed out on 700 MHz band on very high pricing and hopes government to look into it”, Mittal told ET NOW, adding that the company wasn’t interested in the premium 700 MHz band because of “very high pricing”.
– Telecom Secretary JS Deepak: blamed “low financial ability (of telcos) and lack of ideal ecosystem” as a reason behind the non-sale of 700 MHz spectrum, adding that the ministry will consider re-auctioning the 700 MHZ band “when operator’s financial situation improves, (and when) ecosystem is better and as required by government.”
Credit Suisse: said that about 71% of the value of spectrum put up for sale was in the 700MHz band, and since the spectrum saw no takers, “it is likely that government will re-auction this spectrum at reduced prices in order to stimulate demand”

On competition:

– Credit Suisse: said that competition forced telecom operators to shell out higher prices over reserve in only selective category of airwaves. This will hurt older players in the market, CS was quoted as saying in this Bloomberg report.
– Edelweiss Securities: “This auction further reinforces spectrum leadership of Bharti and RJio in the high- speed  data market. We believe, RJio has more balanced holding with the right blend of coverage and capacity spectrum”, as per a Mint report.
– Morgan Stanley: said that Airtel will “benefit from rising in spectrum footprint and operator capex”.

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Pricing will remain under pressure
Morgan Stanley: expects lower pricing power, and pressure on tariffs, saying that “Rise in capex, low FCF (free cash flow) and rising leverage puts balance sheets and earnings at risk”. More in Bloomberg.
On harmonisation
– JS Deepak: told PTI that the telecom ministry might look into harmonizing spectrum purchased by operators in all bands including 1800 MHz and 2100 MHz to make it contiguous and multiply its efficiency. “Only after harmonisation process is complete, will we think of the next auction”.

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