Spectrum Auctions! Windfall gains for Government

CARE Ratings expects that the operators will further leverage themselves, while the consumers will have to bear the brunt of tariff hikes which will become inevitable for the operators to realise returns on these huge investments.

With the 2015 auctions of spectrum reaching their final phase with aggressive bidding being seen across the frequency bands, the government is set for a windfall gain which will be even higher than what the government realised during its most successful spectrum auctions of 2010. The spectrum offered for bidding includes frequencies in the 800 MHz, 900 MHz, 1,800 MHz and 2,100 MHz bands

In the earlier auctions, the spectrum on offer was either freshly released by the government or became vacant as a result of the order of Supreme Court, while these auctions, especially for spectrum in 900 MHz and 1,800 MHz bands, are for spectrum which is currently in use by the operators whose 20-year licenses are slated to expire in the next few months. The high bids are therefore not surprising as these operators face the unenviable task of protecting their large investments and revenue streams from these circles for which the auctions are happening.

CARE Ratings expects that the operators will further leverage themselves, while the consumers will have to bear the brunt of tariff hikes which will become inevitable for the operators to realise returns on these huge investments.