New Delhi: The upcoming spectrum auction to be held in March may not see aggressive response from the industry, and bids may be in the range of Rs 30,000 crore to Rs 50,000 crore for the radiowaves valued at around Rs 3.92 lakh crore, according to analysts.
Telecom operators are likely to focus on renewal of spectrum and Vodafone Idea may not participate in the auction for renewal of their spectrum in some circles, analysts said Thursday.
The Union Cabinet has approved the auction of 2,251.25 megahertz of radiowaves valued at Rs 3.92 lakh crore at the base price.
The next round of auction will be for spectrum in 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz frequency bands. The spectrum will be offered for assignment for a validity period of 20 years. The government has skipped auction of radiowaves between 3.3 Ghz and 3.6 Ghz identified for 5G services.
In a statement, ICRA said it does not foresee any major participation in the 700 MHz band and pegged the bids to be in the range of Rs 55,000-60,000 crore.
ICRA Assistant Vice-President Ankit Jain said the auctions are expected to fetch Rs 55,000 crore-60,000 crore to the exchequer. Even at this participation, the industry will have to shell out around Rs 20,000-25,000 crore upfront, while the balance will have to be paid over 16 years, after a two-year moratorium, he added.
JM Financials, on the other hand, expects bids value to be in the range of Rs 30,000 crore only.
“While the total value of spectrum being put for auction is around Rs 3.9 lakh crore, we see limited participation by telcos to the tune of Rs 30,000 crore, i.E. Less than 10 per cent,” JM Financial said in a report.
Researchers at JM Financials attributed the low bidding in the coming auction to telcos, except Jio, having adequate quantities of spectrum, stressed balance sheet of VIL and to an extent Bharti and upcoming 5G auction, which is moderating the need for 4G spectrum.
“We do not see the possibility of large-scale bidding, as telcos will focus on renewal of expiry spectrum/ augmenting capacity in select circles and there is enough spectrum available with all telcos,” Axis Capital said in a report.
Bharti Airtel has 12.4 Mhz of spectrum in 900 Mhz band and 47 Mhz in 1800 Mhz band, and Reliance Communications’ 44 Mhz of spectrum, being used by Reliance Jio, is coming up for renewal.
Vodafone Idea needs to renew 6.2 Mhz of spectrum in 900 Mhz band and 38.2 Mhz in 1800 Mhz band.
According to Credit Suisse, renewal of these spectrum will cost around Rs 15,000 crore to Bharti Airtel and Rs 11,500 crore to Reliance Jio.
“We expect Jio to purchase additional spectrum (beyond expiring spectrum) as it will look to augment its network capacity having garnered 35 per cent subscriber market share and a much higher share of traffic,” Credit Suisse said in a report.
Credit Suisse research analysts expect Bharti Airtel’s participation in the spectrum auction to be limited to renewing its expiring spectrum, given it has built up its spectrum holdings through merger and acquisitions over the past three years.
“In fact, we would not be surprised if it (Airtel) chooses to selectively let go of some expiring spectrum where it already has adequate holding. We do not expect Vodafone Idea (VIL) to participate in the auction where its 6.2MHz and 38.2 MHz spectrum in 900 Mhz and 1800 MHz bands, respectively, is expiring, given its cash flow constraints.
“Additionally, unlike the spectrum auctions in the past, we do not expect bidding to be aggressive,” Credit Suisse said.
Motilal Oswal in a report said the 5G-recommended 3,300-3,600 MHz spectrum band is not being offered in the upcoming auction, leaving limited options for telcos to make a foray into 5G before the next auction.
PTI
