Vodafone emulates RJio strategy; bids fiercely for 800 MHz band

MUMBAI: It’s a clash of the moneybags, with Vodafone India aiming to pay back Reliance Jio Infocomm in its own coin as the spectrum auction enters its last leg with overall bids reaching Rs 107,709 crore, crossing the previous record set in 2010.

After Jio pushed Vodafone India, Bharti Airtel and Idea Cellular into a bidding war for the 900 MHz band, a move aimed at draining their resources, the local unit of Vodafone, backed by its deep-pocketed UK parent, is doing the same thing: pushing prices up in the 800 MHz CDMA band which is being sought by Mukesh Ambani-controlled Jio to deploy 4G in future, people tracking the auctions said.

“Vodafone could be aiming to get some 3G spectrum at reasonable prices. This is what Jio could be aiming for too,” one of the people said. “The strategy seems to be drain a rival financially, reducing competitiveness in another band which it actually intends to buy.” The operators didn’t respond to emails from ET seeking comment.
The price of the traditionally CDMA 800 MHz spectrum has surged more than 60% from the base level — much to everyone’s surprise — as apart from Jio and Vodafone, Bharti Airtel and even Tata Teleservices have been bidding, the people said. In comparison, the price of 3G airwaves in the 2100 MHz band is just 5% higher than its base price.

The 900 MHz prices, though are nearly 90% more than the staring levels, haven’t moved in the past three days, with most of the attention focused on the 800 MHz band.

At the start of the auction, experts assumed only Jio would be interested in the 800 MHz airwaves. The demand for the band now has surprised many. “Even our own expectation was that the 800/2100 MHz spectrum auctions would fail to see any bidders.

The eventual behaviour of the industry is here for all to see,” Credit Suisse wrote in a note to investors. Another brokerage, Edelweiss, said incumbent operators — Vodafone and Bharti Airtel — could also be interested in 800 MHz “owing to superior propagation characteristics and emerging LTE ecosystem”.

In Mumbai and Delhi, the price of airwaves in the 800 MHz band has crossed that of 900 MHz in the previous auction held in February, 2014.

But the 900 MHz spectrum prices remain higher in Madhya Pradesh (22% higher), Northeast (200%) and Assam (135%), which means some more interest in these areas, said HSBC. These three circles have continuous airwaves, necessary for deploying 4G LTE. Even Tata Tele has joined the 800 MHz race in a few metro regions, showing the imminence of 4G in the country.

Experts suggest that the company is particularly bidding in Delhi, where it has not been allocated its airwaves in 1800 MHz band.

Reliance Communications is topping up airwaves where it doesn’t have 5MHz suitable for a 4G deployment, said an industry expert. These service areas include Himachal Pradesh, Jammu & Kashmir, Odisha and West Bengal.