Why Next Month's Spectrum Auction is Crucial For Idea

Why Next Month's Spectrum Auction is Crucial For Idea
The telecom spectrum auction for various bands scheduled next month will be a crucial affair for Idea Cellular as seven of its circles are coming up for renewal by December 2015 and two by March 2016.

"Idea Cellular not only needs to renew its spectrum, there is no doubt that we have been the fastest growing telecom operator in the country. Based on past results our minutes continue to grow anywhere between 12-15 per cent year-on-year basis and our data volume has been growing between 110-125 per cent year-on-year basis so we have a need for more raw material (spectrum)," Himanshu Kapania, managing director, Idea Cellular said. (Watch Video)

The quantum of auction, reserve price and other details are expected to be released by the government in the 'next few weeks', he said.

"As far as spectrum is concerned it is the key raw material for growth of telecom business and as you're aware around the globe telecom constitutes to about 4 per cent of GDP. It is the harbinger of growth, in the new age economy for GDP to continue to grow and double in every 5-7 year time period you need ICT which is information, communication and technology as the growth engine," he said.

India's telecom industry currently only contributes to 2.1 per cent of the GDP but it has the potential to take it up to 3-4 per cent, Mr Kapania said.

Idea, the third largest telecom company in India, is hopeful that the government will release adequate spectrum at an affordable price to help increase the country's overall infrastructure.

"We are hopeful that government for realising its digital India vision will release the quantum of spectrum which is necessary to grow the overall volume of data in the country and will also make sure that the prices are affordable so that the Indian telecom operators and its investors can spend more amount of capital to increase the overall infrastructure in the country."

Spectrum of 800, 900, 1800 and 2100 Mhz is likely to come up for auction, Mr Kapania said.

800-1800 Mhz are 2G bands, while 2100 is used for 3G.

The Idea Cellular stock ended nearly 4 per cent down at Rs 153.55 on the NSE, underperforming the broader Nifty and the Sensex.


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