India's federal cabinet Thursday approved a plan for selling airwaves in an auction to improve quality and coverage of networks in the world's second-biggest telecom market. The government will sell airwaves valued 963.2 billion rupees ($11.6 billion) at reserve price, according to a statement from India's Ministry of Communications. A total 10,523.1 megahertz airwaves in eight bands — 800, 900, 1800, 2100, 2300, 2500, 3300 MHz and 26 GHz — will be up for sale. The government didn't give a firm timeline for the auction.
The airwaves auction, which will include airwaves held by firms undergoing insolvency, will bolster government finances and help narrow budget deficit in the South Asian nation. Additional airwaves will improve the quality of telecom services and widen the coverage for the consumers, Minister for Information & Broadcasting Anurag Thakur told reporters late Thursday.
It will also help major Indian wireless carriers, Reliance Jio Infocomm Ltd., Bharti Airtel Ltd. and Vodafone Idea Ltd., to boost services in the nation with more than a billion phone users. The local carriers launched 5G services late 2022, stoking the ongoing data service boom in India.
The market, however, is locked into an oligopolistic structure, curbing one carrier's ability to decide pricing. No operator can raise its tariffs unless its rivals do the same or it risks losing subscribers.
“Spectrum auctions in India are always lapped up,” said Utkarsh Sinha, managing director of boutique investment firm Bexley Advisors.
But the fierce competition most companies are locked in is affecting their margins and can affect the ability and size of their bids for additional airwaves, he said, explaining that the pressure on profits can affect the ability and size of the companies' bids.
In the last auction held in 2022, the Indian government raked in $19 billion with Reliance Jio emerging the top buyer spending more than $11 billion on airwaves.
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