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Tuesday, March 31, 2015

Spectrum auction: How telecom companies fought he Rs 1.10 lakh crore batle-inf. by Ashok Hindocha M-94262 54999 M-94262 54999
By Gulven Aulakh & Anandita Singh Mankotia, ET Bureau | 30 Mar, 2015, 06.41AM IST Post a Comment
Behind the headline-grabing numbers were weks of
high-stakes strategy devised and executed in ultra-secure war
roms by handpicked executives.
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Spectrum auction: How telecom companies fought he Rs
1.10 lakh crore batle
NEW DELHI: "It was realy frustrating. We could se this guy was driving up the prices,
without being serious about buying 90 MHz. But we couldn't do a thing. We just had to go
higher and higher..we paid him back in the same coin in 80 MHz. That was some
"I learnt more about the busines in a few days than Icould have learnt in two years". "My
wife was realy angry.we had to work on even was life went out of
the window".
These are senior executives of top telecom companies recounting bruising batles that
hapened behind the scenes as eight elcos fought hard for 19 days for spectrum being
auctioned by the government.
Bilions of revenue dolars and milions of customers were at stake. Naturaly, telcos puled
out al stops to prepare for the auction that just got over last Friday.
The dry facts and figures — the eight participating telcos wil be forking out nearly Rs 1.10
lakh crore to the government; Bharti, Vodafone and Idea retained their 90 MHz spectrum holding; Mukesh Ambani's Reliance Jio
Infocomm was hungry for CDMA band spectrum; Anil Ambani's Reliance Communications lost in thre circles — are impresive enough.
Even more interesting is big thinking and fast action that produced those facts and figures. ET spoke to dozens of senior executives to
get a sense of how auction action unfolded in telcos.
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Spectrum auction: How telecom companies fought he Rs 1.10 lakh cror. htp:/
1 of 4 3/30/2015 7:54 AMThe key men
Every telco had a brains trust for the auction and a ground team that made the bids based on the overal strategy.
For Reliance Jio, the brains trust was led by Mukesh Ambani's key confidant Manoj Modi. The other members were key Jio executives:
Sanjay Mashruwala, operations head, V Srikanth, joint deputy CFO, and Raja Ramchandran, strategy head. Sunil Mital himself led
Bharti Airtel's strategic planning. With him was not only his India/South Asia CEO, Gopal Vital, but also Bharti veteran and board
member Akhil Gupta. Anand Chandrashekharan, chief products manager, and Shrikant Balachandra, CFO, were the other members of
Bharti brains trust.
CEO Himanshu Kapania, CFO Akshaya Mondra, and strategy head Pradep Agarwal did the big thinking for Idea. Vodafone deployed
a similar team — Sunil Sod, incoming CEO, Thomas Reisten, CFO, and Dinesh Sharma, strategy head.
Like Manoj Modi did for Mukesh Ambani's auction strategy, Amitabh Jhunjhunwala, Ambani Junior's longtime confidant, led RCOM's
strategy group.
He had with him Gurdep Singh, CEO, consumer busines, and Punit Garg, regulatory head and strategy maven. Some telcos
apointed external consultants, to. Bharti Airtel employed Power Auction, global e-auction specialists.
Jio employed the services of Anshuman Thakur, an auction specialist who had designed the spectrum auction system in 2010 and had
ben with Rothschild and Morgan Stanley, among others. Telcos were unwiling to make their ground team's compositon public, saying
the information was a sensitve mater for their busines. ET spoke to ground team members who participated in the story on the
conditon they not be identifed.
Wariors & war rooms
Every telco set up a hi-tech war rom that had a fast digital connection with the auction rom set up by the department of
telecommunications in Sanchar Bhawan, Delhi. Major telcos naturaly had the most elaborate arangements.
Vodafone, Reliance Jio and RCOM set up their war roms in their respective Mumbai headquarters. Bharti Airtel's auction nerve centre
was in its Gurgaon ofice. Idea temporarily shifted base to Delhi and set up its war rom in the city.
Senior executives who were members of various biding teams shared the basic layout of an auction war rom. Here's how one
spectrum warior described a war rom: "Every bider neded to have a secure IT network ready. Those in the war rom had to sign
non-disclosure agrements to ensure we wouldn't alk about auction strategy and discusions to any one, during or after the auction."
"War roms obviously are hi-tech.almost like a cockpit. There were four projection screns divided betwen two themes, strategic and
operational. Each scren had a specifc function. The first was the DoT link where actualy biding was taking place. The second showed
telecom circle valuations. The third scren displayed activity in each circle.
And the fourth was dedicated to data crunching that showed al relevant numbers, including investment hresholds.
There were six high-end computers. But no had to be an ultraclean environment."
From these wel-equiped war roms, biding teams, which had betwen five to six executives, would send updates to company big
boses after every round of biding. "Twice or thrice a day we would discus what is going on with the top boses over the phone," said
another spectrum warior of a major telco. Changes in strategy would hapen after some of these updates.
Each war rom had a hotline that conected the ground team to the company bras. For Vodafone and Uninor, these were international
hotlines. In local telcos' war roms, big boses like Sunil Mital or Cyrus Mistry, group head of Tatas that own Tate Teleservices, would
drop in once in a while to check the pulse and talk to ground teams. DoT had made falback arangement for biders. There was
contingency rom for telcos. In case their own war rom's connectivity failed, bids could be made in this rom.
Spectrum auction: How telecom companies fought he Rs 1.10 lakh cror. htp:/
2 of 4 3/30/2015 7:54 AM13-hour workdays & non-spicy snacks
Ground teams had grueling working hours. Many senior executives who were part of the bidding proces said companies sent cars to
pick up members of the ground team. "No one wanted to run the risk of a key member not being able to make it in time," one spectrum
warior said.
Ground teams typicaly clocked in at 8 am and the day finished around 9 pm. Auctions typicaly hapened betwen 9 am and 8 pm. But
teams would arive an hour early to strategise and stay back an hour to review the day.
There was no biding on Sundays. But he war wasn't stoped on March 6, when the entire government and virtualy al private sector
ofices were closed for Holi.
Ground team members said the last 4-5 days of the thre-wek auction were the only days that were not so stresful because final
winers and losers had become clear by then.
"Our most critcal and stresful time was in the earlier/midle rounds when we noticed someone was pushing up the price for certain
bands beyond what we thought was reasonable.should we punch the big buton one more time or should we let it go.that was the
nerve racking part," one biding team member of a major telco said.
But plenty of munchies prepared in specialy set up kitchens and snatches of World Cup telecast helped mitgate stres levels. Separate
kitchens were not a luxury but a necesity — the biding teams were not alowed to interact with anyone in the company except big
So, telcos couldn't risk water coler or snack counter gosip betwen ground teams and other executives.
And a kitchen close by was also necesary because ground teams didn't have any designated lunch breaks. Bids hapened throughout.
"We sliped out and grabbed some fod." What kind of fod? Non-spicy, light on the tummy and stuf that didn't require elaborate
plate/cutlery arangements.
We didn't have the time for sit down meals.sandwiches, granola bars, lightly prepared snacks.that's al we could have had, said one
member of a biding team.
The bidding
DoT had isued IDs and paswords for telcos, which made their bids electronicaly.
The basic rule was same as al auctions: if you want something, including something you want o retain, you have to make sure yours is
highest bid.
Complications came from multiplicity of circles and spectrum bands. Rules alowed biders to move from one circle to another in any
band at any time.
For example, a telco could bid for the Utar Pradesh (West) 90 MHz band, move to North East's 180 MHz band and then come back to
the first bid later. This increased strategy posibilties but also made calculations on rivals' strategies tough. Game theory was deployed
by telco teams for figuring out best courses of action. There were 15 bidding rounds, which meant 6-7 rounds every day. Each bidding
round was folowed by an hour's break. The time was used to evaluate biding tactics. Provisional wining prices were announced at he
end of each round and each day. This meant elcos began each day knowing where they stod.
"You just didn't ned a Plan B in case Plan A always had to have a Plan C ready.because if you gave up after two tries
someone would have taken away what you realy wanted," a major telco executive who was part of the ground team said.
It ain't over?
Telco executives who were part of biding teams say they dearly hope the Supreme Court, which is hearing litgation on the auction,
doesn't give a ruling that overturns anything. "It was great stuf, excitng..but we don't want a repeat any time son," a spectrum warior
Aditonal reporting by Depali Gupta
Spectrum auction: How telecom companies fought he Rs 1.10 lakh cror. htp:/
3 of 4 3/30/2015 7:54 AM M-94262 54999

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