Jio, Airtel likely to see rapid revenue market share gains after 5G auction

Reliance Jio and Bharti Airtel are likely to see rapid revenue and subscriber market share gains at Vodafone Idea's cost in the medium term, post the 5G spectrum auctions, say analysts. They added that loss-making Vi is likely to be forced to invest its pending capital raise of ₹10,000 crore in sprucing up mainly its 4G operation to close the network gap with its rivals.

India's top two telcos, they estimate, could each garner around 150-to-200 basis points (bps) gains over two years after the upcoming 5G airwaves sale, while Vi is likely to cede more ground on this score. A basis point is 0.01%.

The spectrum sale is likely around May-June as the government is pushing for initial 5G rollouts by August 15, India's Independence Day.

Analysts said Jio and Airtel have the balance sheet strength to invest top dollars in pan-India 5G airwaves and consolidate their mobile broadband play despite the prospect of low returns on 5G spectrum spends in the initial years. By contrast, cash-strapped Vi's participation in the upcoming sale is likely to be muted in absence of significant fundraising.

"Airtel and Jio should see an acceleration in revenue and subscriber market share gains at Vi's expense in the medium-term after the 5G auction as both telcos will definitely target pan-India 5G airwaves to invest in this future broadband technology, which financially-weaker Vi won't be able to match," Nitin Soni, senior director (corporates) at global rating agency Fitch, told ET.

CLSA backed the view, saying "Jio and Bharti will lead the 5G auction as both claim their network infrastructure is 5G-ready".