Upcoming spectrum auction give sleepless nights to telcos

With the stage set for the spectrum auctions to begin on March 4, top managements at Vodafone, Idea and Reliance Communications are having sleepless nights, reports CNBC-TV18's Malvika Jain.Top telcos like Vodafone, Idea and Reliance Communications are bracing themselves for the challenge that lies ahead. Out of 22 telecom licenses in total, Idea needs to renew its license in 9 circles, Vodafone and Reliance Communications in 7 each. For these three companies the upcoming auctions will be a make or break battle in some circles.Presently Vodafone has over 45 Mhz in the 900 Mhz band in seven circles which are in question. It picked up 18.6 Mhz for its seven circles during the 2014 auctions and now needs 26.4 Mhz of additional 900 Mhz spectrum. Vodafone will have to retain spectrum in the 900 Mhz band in Maharashtra, Rajasthan and Tamil Nadu to offer seamless services.For Idea Cellular, about 59 Mhz of spectrum in the 900 Mhz band will come up for renewal. The company is in safe terrain in seven out of nine impacted circles. However, it will have to bid aggressively for airwaves in the Gujarat and Western Uttar Pradesh circles where it doesn't have sufficient spectrum holdings. Retaining 900 Mhz spectrum in nine circles is crucial for Idea's future as they account for 72 percent of the company's revenue. The West Bengal, Assam, Bihar, Madhya Pradesh, Orissa, North East and Himachal Pradesh circles are vulnerable for cash strapped Reliance Communications which has no alternative arrangement for continuing operations besides winning back airways. The only company which has managed to hedge itself against aggressive bidding is Bharti Airtel which bought spectrum in the 1800 Mhz band in all the circles where it could lose 900-Mhz spectrum during license renewal. Experts say with the reserve price for 900 Mhz spectrum fixed at Rs 3980 per Mhz, the battle for the cost-efficient 900 Mhz is set to be intense and aggressive.The government however believes that pricing and availability of spectrum is not an issue and that telecom companies are running a bogus campaign.Ravi Shankar Prasad, Telecom Minister, said, "Currently, there is a campaign going around as if there is a big spectrum scarcity, but there is none. This is the not the last auction. In the first auction under the BJP-led government, whatever spectrum could become reasonably available has been put up for auction and in the government's considered view it is adequate.While the government's decision has irked telcos, analysts feel that clarity on spectrum sharing and trading may bring in a sigh of relief.