NEW DELHI: The 4G factor is spinning magic for spectrum in the 800MHz band - earlier dubbed as expensive by telecom operators - with bid prices surpassing the money offered for the coveted 900 MHz band in certain key circles such as Delhi and Mumbai.
While in Delhi, after Friday's auction, the price for 800 MHz has touched Rs 831 crore/MHz against Rs 741 crore/MHz for 900 MHz in the February 2014 auction, in Mumbai, the bid price for 800 MHz was Rs 727 crore/MHz compared to Rs 563 crore for 900 MHz in February 2014.
Industry analysts estimate that there is a direct battle here between Mukesh Ambani's Reliance Jio (Rel Jio) and incumbents like Bharti Airtel and Vodafone. The existing operators do not want Rel Jio to get 800 MHz airwaves as it will strengthen its 4G plans and make its network more efficient and effective.
Sistema Shyam (owned by Russian conglomerate Sistema) had pulled out, saying that reserve prices in 800 MHz are "way out of line and do not merit a strong business case." SSTL is the only operator that offers services exclusively in the CDMA band of 800 MHz even as others such as Reliance Communications and Tata Tele have limited holdings in the frequency.
However, the reality is turning out to be something else. Overall bid prices in the 800 MHz band have gone up by 82% over reserve price (as per Friday's closing prices). The escalation is 81% for the 900 MHz band, 16% for the 1,800 MHz band and 5% for the 2,100 band.
What is the reason behind sudden attraction towards 800 MHz band, which was not in favour before the start of auction? It's 4G, where high-speed data will be the crucial game-changer. "Data, unlike voice, gets consumed indoors. The 800 MHz band provides the best opportunity to offer 4G LTE (long-term evolution) for indoor coverage in comparison to 1,800 MHz and 2,300 MHz bands where it is a big challenge," said Sanjay Kapoor, chairman of Micromax, who was earlier CEO of Airtel.
While Delhi and Maharashtra have got holdings of 3.75 MHz each for sale, Madhya Pradesh and Andhra Pradesh have 6.25 MHz each, while Mumbai has 7.5 MHz.
Speaking about the phenomenon, UBS said the 4G play is working strongly in favour for 800 MHz. "Operators are now focusing on the 800MHz band, which can be used to provide 4G LTE services." UBS said Rel Jio is believed to be battling incumbents Bharti Airtel and Vodafone for the spectrum.
JM Financial also said existing telecom operators may be buying into the 800 MHz band to stop Rel Jio from acquiring spectrum there. "Incumbent telcos appear keen to eliminate cost-arbitrage between 800 MHz and 900 MHz, thus making 4G-800 MHz band more expensive for Rel Jio," it said.
Rel Jio currently has spectrum in 1,800 MHz and 2,300 MHz bands, which are not as efficient for data or voice operations. JM Financial said its absence from 800 MHz will be a "strategic gap" and will provide a "significant edge" to rival operators in the data business.
Bid prices of 800 MHz band top 900 MHz on 4G drive - The Times of India
While in Delhi, after Friday's auction, the price for 800 MHz has touched Rs 831 crore/MHz against Rs 741 crore/MHz for 900 MHz in the February 2014 auction, in Mumbai, the bid price for 800 MHz was Rs 727 crore/MHz compared to Rs 563 crore for 900 MHz in February 2014.
Industry analysts estimate that there is a direct battle here between Mukesh Ambani's Reliance Jio (Rel Jio) and incumbents like Bharti Airtel and Vodafone. The existing operators do not want Rel Jio to get 800 MHz airwaves as it will strengthen its 4G plans and make its network more efficient and effective.
Sistema Shyam (owned by Russian conglomerate Sistema) had pulled out, saying that reserve prices in 800 MHz are "way out of line and do not merit a strong business case." SSTL is the only operator that offers services exclusively in the CDMA band of 800 MHz even as others such as Reliance Communications and Tata Tele have limited holdings in the frequency.
However, the reality is turning out to be something else. Overall bid prices in the 800 MHz band have gone up by 82% over reserve price (as per Friday's closing prices). The escalation is 81% for the 900 MHz band, 16% for the 1,800 MHz band and 5% for the 2,100 band.
What is the reason behind sudden attraction towards 800 MHz band, which was not in favour before the start of auction? It's 4G, where high-speed data will be the crucial game-changer. "Data, unlike voice, gets consumed indoors. The 800 MHz band provides the best opportunity to offer 4G LTE (long-term evolution) for indoor coverage in comparison to 1,800 MHz and 2,300 MHz bands where it is a big challenge," said Sanjay Kapoor, chairman of Micromax, who was earlier CEO of Airtel.
While Delhi and Maharashtra have got holdings of 3.75 MHz each for sale, Madhya Pradesh and Andhra Pradesh have 6.25 MHz each, while Mumbai has 7.5 MHz.
Speaking about the phenomenon, UBS said the 4G play is working strongly in favour for 800 MHz. "Operators are now focusing on the 800MHz band, which can be used to provide 4G LTE services." UBS said Rel Jio is believed to be battling incumbents Bharti Airtel and Vodafone for the spectrum.
JM Financial also said existing telecom operators may be buying into the 800 MHz band to stop Rel Jio from acquiring spectrum there. "Incumbent telcos appear keen to eliminate cost-arbitrage between 800 MHz and 900 MHz, thus making 4G-800 MHz band more expensive for Rel Jio," it said.
Rel Jio currently has spectrum in 1,800 MHz and 2,300 MHz bands, which are not as efficient for data or voice operations. JM Financial said its absence from 800 MHz will be a "strategic gap" and will provide a "significant edge" to rival operators in the data business.
Bid prices of 800 MHz band top 900 MHz on 4G drive - The Times of India
