High reserve prices are a strain on sector\u2019s financial viability<\/strong><\/p> The latest round of India telecoms spectrum auction concluded on a rather disappointing note \u2013 closing in on INR 65.7 bn with nearly 60% of the airwaves not attracting any bids. This is the third instance of muted auction resulting from a pricing mismatch in terms of the government\u2019s expectations and the operators\u2019 interest. These auctions clearly highlighted the basic principles of economics where low market demand will push the supply price to come down, and equilibrium will be achieved. Similarly, as long as the government fixes reserve prices near the previously discovered market prices, the auction outcome will be unfavourable.<\/p> The muted response in the 2016 spectrum auctions was in line with expectations. No bidding was witnessed in the high spectral efficiency bands of 700 MHz and 900 MHz. While the 700 Mhz band was over-priced to witness any participation, no bidding in the legacy 2G band was primarily due to the low quantum ~9.4 MHz in the offing. Since the telcos were successful in safeguarding their holdings from license expiry via the 2015 spectrum auction which enabled access to clean and litigation free spectrum for the next 20 years. Having aid that, the current auction offered no real business case for investment in this band. The high capex 2500 MHz band was better priced than the low capex 700 MHz band. Interestingly, it witnessed bidding in over 90% of the total circles at offer, though at nearly no premium over reserve price. Given it\u2019s under developed ecosystem, activity in this 4G band is indicative of the operators\u2019 intent to commit investments in the data play, only if they perceive investing at the current base price may justify the return on investments.<\/p> Investments in the 2100 MHz 3G band was in line with expectations 3G continues to drive major chunk of India\u2019s growth story. According to industry reports, 3G contributed 64% of the total data traffic in 2015. With the auction, operators\u2019 managed to supplement their 3G holdings to cater to the rising data demand. All circles witnessed traction and the mark up over reserve prices were limited to the range of 0 - 57%.<\/p> 700 MHz was over-priced; telcos opt for other 4G bands to address the current data needs<\/strong><\/p> With superior spectral efficiency and propagation characteristics, the digital dividend spectrum provides an opportunity for the operators to differentiate service offering as well as cost effectively improve coverage and quality of service. It\u2019s is for this reason, the niche 700 MHz band is extremely valuable and cost effective in terms of capex spends.<\/p> Going by the current LTE adoption in India is in its nascent stages, which range between 5-10% (on the higher side in urban areas); and the LTE device ecosystem still needs to mature. Thus, from an investment viability perspective, the operator\u2019s reluctance to commit heavily in this band is in line with what was witnessed. The return on investments were not justified with the overpriced reserve prices at INR 114.85b per MHz, which exceeds the globally discovered auction prices at ~ 1.8x of Argentina, 4.8x of Brazil, 19.8x of Chile (clearing price per MHz per populated adjusted to ARPU).<\/p> Further, with the current 4G holdings, operators have sufficient capacity and dense networks in urban and semi urban regions to cater to the data demands using other 4G bands such as 1800\/2300\/2500 Mhz. LTE services have already been rolled out in these bands and their ecosystem is well developed in comparison to 700 Mhz, Interestingly, these bands witnessed good traction in select circles though bidding was restricted to low premiums over reserve prices. This clearly indicates that the operator were only looking to plug in additional spectrum to augment their regional footprint.<\/p> Going forward, pricing will be critical as the data will play a pivotal role in government\u2019s Digital India vision<\/strong><\/p> The data tsunami is set to hit the country in the foreseeable future. The ecosystem is expected to take at least 2-3 years to evolve, however, once 4G gains mass adoption, the play of 700 Mhz is bound to increase and the correct pricing of this band will be critical in driving uptake. Looking ahead, it is essential to recognize that the amount and price of spectrum put to auction should not only reflect the benefits it brings to operators, but also consider the future socio-economic gains realized through improved tele-density and digital inclusion. An expensive auction not only results in higher cash outflows and strained balance sheets, but a slow down in network rollouts.<\/p> Having said that, the government\u2019s effort in adopting the APT 700 band is in line with the global digital dividend initiatives. Globally its ecosystem is shaping up at a relatively faster pace in markets such as US, Germany and France. For India, its introduction is a step in the right direction and will greatly support in addressing the data boom in India over the long run.<\/p> All in all, the auction was an encouraging initiative by the government, where for the first time, the harmonised spectrum in the 1800 Mhz band was made available in addition to releasing LTE spectrum in new bands new bands such as 700 Mhz and 2500 Mhz. In a highly competitive telecoms industry where fragmented spectrum holdings have acted as a challenge to efficient utilization, the auctions have opened doors for unleashing the data play. India has steered ahead in the quest for connecting the unconnected and hence bringing the much needed digital kranti in the lifestyles of its \u2018aam aadmi\u2019. Going forward, the vision of bringing the power of affordable connectivity to a billion Indians is possible only when adequate spectrum is made available at a business viable price.<\/p>","blog_img":null,"featured":0,"status":"Y","seo_title":"2016 spectrum auction stumbles on low demand","seo_url":"2016-spectrum-auction-stumbles-on-low-demand","cms_link":"2016-spectrum-auction-stumbles-on-low-demand\/1852","updated_at":"2016-10-07 18:38:32","time":"2016-10-07 18:38:31","authors":[{"author_name":"Prashant Singhal","author_description":"Technology, Media & Entertainment and Telecommunications (TMT) Sector Leader, EY","author_designation":"Technology, Media & Entertainment and Telecommunications (TMT) Sector Leader","author_company":"EY","profile_pic":"retail_files\/author_1469167607_temp.jpg"}],"tags":[],"url_seo":"2016-spectrum-auction-stumbles-on-low-demand"}">
频谱的可用性和访问形式提供电信服务的基础。获取光谱在很多导致了金融危机和紧张的资产负债表的印度运营商在过去的几年里。实事求是地看,在2010 - 2015之间,电信行业已经花了~ 44美元b频谱收购。,债务水平升级CAGR为24%在这个时期达到57.2美元b部门收入没有增加在期间和增长率只有8.2%。资本投资推出网络形成一个相当大的一部分投资。在过去的五年里,电信运营商投资累积资本支出42美元b频谱之外的投资。电信是一个高度资本密集型行业和世俗的每用户平均收入下降,利润率下降。印度电信的号码,显然是一个部门遇险,朝着一个潜在的债务陷阱。 高储备价格是一个部门的财务可行性 最新一轮的印度电信频谱拍卖结束令人失望的一面——接近印度卢比657亿年近60%的电波不吸引任何投标。这是第三个实例的拍卖价格不匹配造成的政府的期望和运营商的利益。这些拍卖显然强调了经济学的基本原理,较低的市场需求将推动价格下降,供给和均衡实现。同样的,只要政府修复储备价格在之前发现的市场价格,拍卖结果都是不利的。 2016年的低调反应频谱拍卖与预期一致。没有投标目睹了频谱效率高乐队的700 MHz和900 MHz。而700 Mhz频带超见证任何参与,没有投标遗留2 g带主要是由于较低的量子~ 9.4 Mhz的筹备中。自电信公司成功地维护他们的持有执照到期2015年通过频谱拍卖使清洁和诉讼自由光谱在接下来的20年。援助,当前拍卖没有提供实际的商业理由投资在这个乐队。 高资本支出2500 MHz频带定价比低资本支出700 MHz乐队。有趣的是,它见证了招标在提供超过90%的总圈,虽然几乎没有保留价格溢价。鉴于它在发达的生态系统,活动4 g带表明运营商的意图进行投资数据,只有他们认为当前价格基本可以证明投资回报率的投资。 投资2100 MHz 3 g带是符合预期的3 g将继续推动主要的印度的增长故事。根据行业报告,3 g在2015年贡献了64%的数据流量。拍卖,运营商的管理来补充他们持有的3 g迎合日益增长的数据需求。各界目睹了牵引和马克在储备价格限制在0 - 57%的范围。 700 MHz是定价过高;电信公司选择其他4 g乐队,以解决当前数据需求 优越的频谱效率和传播特性,数字红利频谱为运营商提供了一个机会来区分服务和成本有效地提高覆盖率的服务质量。它是出于这个原因,利基700 MHz频带极具价值和成本有效的资本支出。 将由当前LTE采用在印度是处于初期阶段,它介于5 - 10%之间(在较高的一边在城市地区);和LTE设备生态系统仍然需要成熟。因此,从投资可行性的角度来看,这个乐队的运营商不愿提交大量符合见证。过高的投资回报率并不合理储备价格每MHz INR 114.85 b,这超过了全球发现的拍卖价格~ 1.8 x(阿根廷、巴西、智利19.8 x 4.8 x(结算价格每MHz ARPU密集调整)。 此外,与当前持有的4 g,运营商有足够的能力和密集的网络在城市和半城市地区迎合数据要求使用其他4 g乐队如1800/2300/2500 Mhz。LTE服务已经推出了这些乐队和他们的生态系统很发达700 Mhz相比,有趣的是,这些乐队目睹好牵引在选择圈虽然招标是局限于低溢价储备价格。这清楚地表明,运营商只是想插入额外的频谱来增强他们的地区的足迹。 展望未来,定价将至关重要的数据在印度政府的数字将发挥关键作用 数据海啸将在可预见的未来。生态系统预计将需要至少2 - 3年的发展,然而,一旦采用4 g的收益质量,700 Mhz的发挥必然增加,这个乐队的正确定价在推动吸收至关重要。展望未来,很重要的一点是认识到数量和价格的频谱拍卖不仅要反映它给运营商带来的好处,但也考虑未来社会经济收益意识到通过改善tele-density和数字包容。一个昂贵的拍卖不仅导致更高的现金流出和紧张的资产负债表,但在网络发布中慢下来。 话虽如此,政府的努力在700年采用恰当的乐队符合全球数字红利计划。全球的生态系统是一个相对速度在美国等市场,德国和法国。对印度,它的引入是一个正确方向的一步,将极大地支持在解决数据在印度长期繁荣。 总之,政府拍卖是一个令人鼓舞的倡议,在第一次统一光谱在1800 Mhz频带可用除了释放LTE光谱等新的乐队乐队700 Mhz和2500 Mhz。在竞争激烈的电信行业分散光谱持有有效利用是一个挑战,拍卖已经打开门释放数据。印度将在追求连接无关,因此将急需的数字kranti生活方式的“麦aadmi”。未来的愿景将负担得起的力量连接十亿印度人可能只有当足够的频谱在业务提供可行的价格。
Other popular 4G bands vis-\u00e0-vis 1800 MHz and 2300 MHz witnessed positive traction with over 95% circles witnessing activity on the 1800 MHz band and all circles witnessed bidding in 2300 MHz band, though at very low premiums over the reserve prices. Clearly, the operators intended to augment their existing 4G portfolio at a more reasonable price in comparison to the premium 700 MHz band.<\/p> 
其他受欢迎的4 g带相对于1800 MHz和2300 MHz目睹了积极的牵引力超过95%圈见证活动在1800 MHz频带和各界目睹招标在2300 MHz频带,储备价格虽然以非常低的费用。显然,运营商为了改进现有的4 g组合在一个更合理的价格相比溢价700 MHz频带。
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