Do you know that prices emanating out of the spectrum auctions in India do not correlate with the revenue potential of the respective markets? Isn’t this strange? As normally one would expect the distribution of value across circles for bands must approximately align with its (circle’s) revenue distribution. In other words, these percentages must be approximately same, even if the absolute values are different (linked to band’s propagation characteristics, maturity etc). Then why are these numbers oscillating violently across bands and circles? This is important, as the operators have very little room for complacency to bid irresponsibly after having spent more than 50% of the total capex spend in buying spectrum and with growth in real terms being absent. See this – Has the Indian telecom industry stagnated? The current note is an attempt to investigate this problem and identify possible actions that could have been undertaken to prevent this situation.
The following chart provides a % distribution of the telecom industry’s revenue across various circles in India.
