Reliance Jio Infocomm has been investing quite a lot of effort and money into its 4G business. However, the Mukesh Ambani led telecom operator does not seem to be content with being the only pan-India 4G license holder. The company is also set to enter the 2G space with a bang. With this move, the player is expected to compete against other top dogs in the same space.
RIL led Jio Infocomm submitted an application for 2G airwaves in the 900MHz and 1800MHz bands, and although they have an option of pulling out by January 27th, that is a surefire impossibility according to market analysts. The bidding process is due February 3rd.Competitors in this auction include Vodafone, Airtel, Aircel, Tata Teleservices, Idea Cellular, Reliance Jio, Telewings (Uninor) and Reliance Communications. The decision to buy 2G spectrum will makethe company’s operations available across various telecom platforms, making its offerings the widest among operators, matched only by Airtel. This is because the company offers pan-India 4G services and has also been allowed to offer voiceover-internet after bagging a unified licence.
The fresh sale is expected to fetch the cash-strapped government upwards of Rs 40,000 crore and bidding is likely to be aggressive in the crucial 900MHz band, which is more cost-productive and efficient for running telecom services. After receiving lukewarm response in the previous two rounds of auctions, the government had slashed reserve prices by 25-53% for this round to get a more aggressive response from companies.
The new reserve price for the pan-India 1800MHz auction has been fixed at Rs 1,765 crore (per MHz). In 900 MHz, the per MHz price for Delhi will be Rs 360 crore, Mumbai Rs 328 crore and Kolkata Rs 125 crore. Big operators like Airtel, Vodafone and Idea will see their licences in the top metros expire from this year, and with the government going in for re-sale of the vacated spectrum, they are expected to be aggressive in the auctions. The government plans to sell 403 MHz spectrum in the 1800MHz band, while in 900MHz about 45 MHz will be on sale. According to the notice inviting applications, an operator will have to purchase a minimum of 5 MHz.The 1800MHz band is being put up for auction following the Supreme Court order that the government sell all thespectrum that was freed from the cancellation of 122 licences on February 2, 2012, in the 2G spectrum allocation case.
Telecom secretary M F Farooqui was quoted as saying, “Eight applicants have applied. The auction will be successful, that is what we believe.” From the sale of spectrum in the current year, the Budget has provided for Rs 11,343 crore. We will exceed that.”