Before 2015, the Indian telecom industry was rife with players—nine in all. Then Reliance Jio happened, and as data tariffs plummeted, a wave of consolidation ensued. The latest example being the merger of Vodafone India and Idea Cellular to form Vodafone Idea which concluded on 31 August. Now, the Indian telecom industry has just three major players—Reliance Jio, Airtel, and Vodafone Idea. And as the dust of consolidation settles, a curious new reality has emerged. Spectrum, once the object of bidding wars, is no longer a rare commodity. In fact, thanks to consolidation, the remaining players have it in abundance.
“We have now reached a situation where there is a spectrum surplus for the next 24-36 months,” says P Balaji, chief regulatory & corporate affairs officer at Vodafone Idea. A senior source in the telecom industry says that the newly-merged entity is expected to generate annual savings of Rs 8,400 crore ($1.26 billion) on the capex and opex side over the next four years. Importantly, the company feels it doesn’t need to invest in more spectrum to run its operations.
The same goes for Airtel, which similarly has no appetite for more spectrum. After its acquisition of Telenor in May—a deal which gave it 43.4 MHz of paired spectrum in 1800 MHz band across seven circles—Airtel’s CEO Gopal Vittal told analysts that Airtel had no need to invest in radio waves. This notion will only strengthen once the approvals for Airtel’s acquisition of Tata Teleservices are cleared.
Jio, on the other hand, has acquired spectrum from Anil Ambani-led Reliance Communications, 122 units of MHz across the 850, 900, 1800 and 2100 MHz bands. All told, the source mentioned above estimates that Airtel holds over 1,600 MHz of spectrum, while Jio is in possession of over 1,400 MHz. Vodafone Idea, meanwhile, has 1,850 MHz.
While this surfeit bodes well for the telcos, it throws a wrench in TRAI’s plans. TRAI wants another spectrum auction, which will include airwaves for fifth-generation mobile technologies—more commonly known as 5G—which can offer up to data speeds of up to 100 Mbps. TRAI has even recommended base prices for the same. But according to executives and analysts The Ken spoke to, the spectrum up for grabs is unlikely to find takers. Telcos are unwilling to participate in the auction, not only due to their ample spectrum holdings but because of what they perceive to be exorbitant spectrum prices—industry body Cellular Operators Association of India (COAI) observed that South Korea’s 5G spectrum auction was considerably cheaper. This, coupled with the debt levels of telcos, make any additional spending for spectrum unwise.