Spectrum auctions often wind up becoming burdensome. Ask executives who were with major mobile service providers in Western Europe when third generation spectrum was auctioned.
It might yet be the case for 3G spectrum auctions in India, as well. "The auction design and the scarcity of spectrum have resulted in exorbitant bids to secure the spectrum, particularly in renewal circles, where huge investments have already been made on the assurance of a continuity of business enshrined in the licenses issued by the DoT," said Gopal Vittal, Bharti Airtel's CEO for India and South Asia.
Put another way, spending already seems to have strategic implications, as a winnowing of suppliers from as many as eight in a region to perhaps five already seems underway.
For some of the smaller providers, the spectrum auctions will eventually be seen as contributing to their acquisition by other providers, in addition to new competition from Reliance Jio.
“The only way it gets bigger is if there’s some dark horse bidder like a private investor," said Jennifer Fritzsche, an analyst with Wells Fargo Securities.
Less than a year ago, bidders pledged $44.9 billion in the so-called AWS-3 auction. Aggressive price competition, though, is hitting profits, crimping willingness to boost capital spending and making additional debt loads unappetizing.
AT&T and T-Mobile US generally are believed to be setting up for vigorous bidding, while Sprint will not bid and Verizon and Dish Network have not been too forthright about their own potential plans.
Comcast and possibly a few others might also decide to bid.
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