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Can telecom players heave a sigh of relief?
Wed, 15 Apr Pre-Open

The recently concluded telecom spectrum auction had largely been an exercise of survival for established players in the telecom industry. Large telecom companies such as Bharti Airtel, Vodafone and Idea Cellular slugged it out and succeeded in holding on to their spectrum license in the 900 MHz band. Bharti and Vodafone managed to add more spectrum in a few circles at the expense of Reliance Communication. The latter lost in five of the seven circles where 900 MHz renewal was due. While entrant Reliance Jio did not win in the 900 MHz band, its entry pulled up the auction price in that space. Bharti and Vodafone after bidding for existing turf, used the balance proceeds to expand their 3G network. Reliance Jio won six new circles in the 1800/800 MHz bands paving way for its 4G foray. Small players like Tata Teleservices and Aircel managed to win some spectrum in these bands.

The conclusion of the auction for 20-year spectrum license across four bands and 22 circles has fortified the leadership position of large telecom players. But the huge outlay of Rs 1.1 trillion to be paid in instalments is likely to be a drain on their balance sheets. Moreover, the entry of Reliance Jio is likely to increase the competitive intensity and exert pressure on the profitability. It will be interesting to see how the telecom companies chart out the future course to capitalize on the growth potential in voice and data services profitably.

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