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As telecom operators intend to focus on spectrum renewal, there might not be a large scale bidding and the Government not auctioning 5G spectrum reduces the risk of huge cash outgo, according to analysts.
“We do not see possibility of large scale bidding by operators, given that there is enough spectrum available with them. Bharti Airtel and Vodafone Idea Ltd (VIL) will have spectrum expiring mostly in the 1800 MHz band (less expensive relatively) across eight circles,” Axis Capital said in a report.
The telcos’ focus will be on renewal of expiry spectrum and augmenting capacity in select circles, it said.
However, VIL and Bharti Airtel may not renew the entire spectrum as they already have backup airwaves available with more spectrum. Bharti Airtel may focus on capacity spectrum in 1800 and 2300 MHz and may also bid for some sub-GHz spectrum to improve indoor and rural coverage.
For Reliance Jio Infocomm, spectrum which it had traded from Reliance Communictions (RCom) is coming up for renewal across 10 circles, which is in the range of 35-40 MHz in 800 MHz band. Besides. it already has sufficient spectrum in these circles (70 MHz in 800 MHz band alone in different circles).
According to Credit Suisse, while RJio is expected to add more spectrum, Airtel might restrict itself to renewing expiring spectrum.
“We do not expect VIL to participate in the auction where its 6.2 MHz and 38.2 MHz spectrum in 900 and 1800 MHz bands are expiring, given its cash flow constraints. Additionally, unlike the spectrum auctions in the past, we do not expect bidding to be aggressive, given the limited number of participants (operators) and adequate supply of spectrum from the government,” Credit Suisse said.
The Cabinet, on Wednesday, approved the telecom spectrum auction to be held in March. The notice inviting applications will be issued within this month.
Also read: Govt to sell 2251.25 MHz spectrum worth ₹3.92-lakh crore in March
According to Axis Capital, there will be no auction of 5G spectrum yet, as the Defence ministry and Department of Space have made claims for about 125 MHz of spectrum, leaving only 175 MHz of airwaves for telecom companies. While deferment of 5G reduces the risk of large cash outflow for telcos in short term, it also gives time for development of eco-system and test cases around 5G.
The spectrum auction shall not include spectrum in 3300-3600 MHz bands, which have been identified for 5G, according to Credit Suisse.
“This should help allay some investor concerns around earlier-than-expected launch of 5G and consequent capex cycle for Indian telecom operators,” it added.
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