Four years after the 3G dud, telcos pay more for 900 mhz

Feb 12 2014, 04:50 IST
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SummaryPrivate sector telcos have so far collectively bid close to R60,000 crore for 2G spectrum in the 900 MHz and 1800 MHz bands.

Private sector telcos have so far collectively bid close to R60,000 crore for 2G spectrum in the 900 MHz and 1800 MHz bands. That’s way more than the R50,968.37 crore they forked out for 3G spectrum in mid-2010. Taken together with the bill for broadband

wireless access (BWA) spectrum, however, the tab back in 2010 was a hefty R1,06,262.25 crore, including the R29,598 crore paid for 3G and BWA by BSNL and MTNL.

Nearly four years down the line, though, the eight players that bought the spectrum are yet to fully roll out services in the circles they’re operating in. Those that have a 3G presence in a circle, which is the same as a state, offer services only in the top cities. Indeed, 3G hasn’t really taken off — of the India’s mobile subscriber base of 881.13 million, less than 5% or 40 million users today have access to a 3G connection. Though data on 3G revenues is not separately available, it is small. For Bharti Airtel, data services make for 10% of mobile revenues but just 17% of its data customers are on 3G networks.

Of the seven operators who bagged BWA spectrum just one — Bharti Airtel — is in business. But Bharti too has rolled out the service in just four cities, drumming up a subscriber base of around 100,000, although it acquired the spectrum for eight circles, including four that it got by acquiring Qualcomm’s BWA licences. In fact, Reliance Jio Infocomm, the biggest BWA operator with pan-India spectrum, is yet to go commercial.

Meanwhile, state-owned operators BSNL and MTNL, which managed to access spectrum ahead of the private telcos — they didn’t bid at the auctions but paid the same price — have not been able to attract subscribers for their 3G offering; as for BWA, they recently surrendered the spectrum and have been promised a refund of their money.

The reason roll-outs have been so slow is because having forked out huge amounts for spectrum, companies have been left with little to spend on infrastructure. For instance, in a circle like Delhi the 3G network in the 2.1 GHz spectrum band has been put up over the 900 MHz (2G) tower. “The gap between the 900 MHz and 2.1 GHz never gets filled, thus leaving the service patchy,” an executive from a telco points out.

Sanjay Kapoor, former CEO, India and South Asia, Bharti Airtel, says

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