Assessing operators’ bidding strategies based on the earnest money deposited ahead of the upcoming spectrum auction, analysts predict that Vodafone Idea will considerably lag behind Bharti Airtel and Reliance Jio in 5G deployment, thus ensuring that the telecom market becomes a virtual duopoly.

Analysts believe that the operator will give sub-GHz spectrum — 700MHz — a skip this time around, and buy 3.5GHz in specific circles only, instead of nationwide. Therefore, experts agree that Bharti Airtel would gain from Vi’s market share loss due to its minimal 5G deployment. Adani’s threat in the consumer mobility telecommunications space can also be ruled out for now as Vi’s prospects wane and a future acquisition by Adani of Vodafone Idea is off the table.

According to Department of Telecommunications disclosure, the third largest operator submitted an earnest money deposit of ₹2,200 crore for the upcoming 5G auctions. This pales in comparison to the submissions made by both Airtel (₹5,500 crore of EMD) and Reliance Jio (₹14,000 crore)

According to a report by Nomura, nil spectrum usage charges boosted Vi’s participation in the upcoming 5G auctions. However, Nomura notes that while Vi will bid for 22*50MHz of spectrum pan-India in the mm wave band, it will bid for a minimal amount of spectrum in the 3.5 GHz only in specific circles, namely, the top metros and Circle A and Circle B. “This accounts for 95 per cent of Vi’s access revenue,” the report noted. Both, mm wave and 3.5 GHz are crucial bands for 5G deployment. 

Virtual duopoly

In comparison, according to analysts’ assessment, both Reliance Jio and Bharti Airtel would bid for a substantive amount of spectrum in both these bands pan-India, which will ensure better 5G deployment. Thus, the Nomura report concluded, “Bharti Airtel remains well positioned to compete against Reliance Jio in the upcoming 5G roll-out. We think Bharti Airtel and Reliance Jio’s market share gains could accelerate further at Vi’s expense, and the Indian telecom market could become a virtual duopoly.”

IIFL notes that Adani is also unlikely to bail out Vi through a potential merger in the future. Their report noted, “Vi’s high debt may be a dampner for Adani Group’s potential inorganic move.”

Burdened with a debt of almost ₹1.8 trillion and losing 4G subscribers to Bharti Airtel and Reliance Jio, the onset of 5G could potentially be a nail in Vodafone Idea’s coffin. The telco is unlikely to be able to compete with the top two operators on future technologies in the near term, which makes its prospects even more unclear in the future.