Telcos may bid for ₹1.6 lakh crore in auctions

Reliance Jio, Bharti Airtel, Vodafone Idea may bid for over one-third half of the spectrum put on sale taking the total proceeds to ₹1.6 lakh crore, if they were to bid for the pricier 700 Mhz band, pushing up the overall demand for airwaves compared to previous auction rounds, said analysts tracking the sector.

“Telcos may look at 700MHz more closely as it is the primary sub-GHz band for 5G globally. Incumbents may also bid more aggressively for spectrum in 3.3GHz/26GHz to crowd out Adani Group. This suggests overall demand to range between $ 13-20 billion, which is higher than the demand seen in previous auctions,” said analysts at Jeffries Equity Research in a note dated July 20.

Analysts tracking the sector said that Reliance Jio is expected to lead the spending of up to $11 billion if it decides to bid for 700 Mhz band in this round of auctions, which can be used for setting up standalone 5G network or SA-5G.

“If Jio aspires to roll out SA-5G, then it could also bid for an additional 5MHz spectrum in 700MHz band which would cost ₹196 billion. All this combined could lead to spends in the range of $6-11 billion which is 3-6x of its EMD,” they added. EMD refers to earnest money deposit made to the government which shows the maximum bidding a carrier can make during the auction.

They added that Bharti Airtel is expected to bid for 100MHz of spectrum in 3.3GHz band and 800MHz of 26GHz spectrum enabling it to lower its spectrum usage charge immediately. The No 2 carrier is also expected to purchase some airwaves in the 900 Mhz or 1800MHz bands to cover for renewals and for completion of blocks of 5-15 Mhz units of airwaves in some markets, besides increasing its spectrum share in 2300 Mhz band in six circles.

“This should lead to spectrum purchase of $5-6bn, implying 7-9x of the EMD submitted. In the past auctions, Bharti has spent 5-7x of the EMD submitted,” Jeffries said in the note.

They further added that Vodafone may acquire at least 50MHz spectrum in 3.3GHz in metro and A-circles and acquire 400MHz of spectrum in 26GHz band, leading to spends in the range of $1.7-2.3 billion.

Reliance Jio, Bharti Airtel, Vodafone Idea and Adani Data Networks have been finalised as the bidders for the spectrum auctions beginning July 26, as per the final list of participants issued by the department of telecommunications on Wednesday.

The government has put up over 72 GHz of airwaves worth about ₹4.3 lakh crore including several 5G bands for sale in the upcoming auctions that will begin on July 26. According to the schedule issue by the department of telecommunications, the government will now hold a mock auction on 22nd and 23rd July, before beginning with the actual auction.