5G sale starts on Tuesday; no aggressive bids expected
PremiumThe spectrum auction will also see new entrant Adani Data Networks pick up spectrum for launching its captive network and deploying networks for enterprises.
Reliance Jio Infocomm Ltd, Bharti Airtel Ltd and Vodafone Idea Ltd are set to fight it out to secure bandwidths for rolling out 5G networks starting Tuesday when the government will put airwaves worth ₹4.3 trillion on sale.
The spectrum auction will also see new entrant Adani Data Networks pick up spectrum for launching its captive network and deploying networks for enterprises.
The four companies have together submitted earnest money deposits of ₹21,800 crore, allowing them to bid for spectrum worth ₹2.11 trillion if fully utilized.
Industry experts said telecom service providers are unlikely to bid aggressively across the 10 bands, and 5G bands may see sales at base prices, primarily due to the 39% cut in spectrum base prices by the telecom regulator and easy payment terms of 20 equal instalments set by the government.
“We expect spectrum to be sold near reserve prices and estimate demand to range between $13-20 billion vs $54 billion worth of spectrum being sold," said analysts at Jefferies in a note.
A substantial reduction in overall payment terms will come from the removal of spectrum usage charges (SUC) for auctions and no upfront payments, analysts at Bernstein said.
Analysts at IIFL Securities expect spectrum worth ₹1.14 trillion to be bought by Reliance Jio, Bharti Airtel and Vodafone Idea in the 3.5GHz, 26GHz, 900MHz and 850MHz bands.
The 3.5GHz band is set to be the most popular among carriers, where nearly 330 units of airwaves are available for purchase at ₹317 crore per unit.
MINT PREMIUM See All
India’s leading carrier Reliance Jio is likely to pick up 100MHz in this band, while No. 2 Bharti Airtel is expected to take up about 50-80MHz in key circles.
Vodafone Idea is likely to pick up about 40MHz in its strong circles of Mumbai, Delhi, Gujarat and Kerala.
“We now expect telcos to bid for adequate quantities of this band, especially as they would not want to take the risk of leaving large quantities of spectra for future auctions, where there is a potential risk of participation from the Adani Group," said analysts at IIFL Securities in a note.
They expect Jio to bid for the entire 850MHz spectrum on offer as it extends its lead in the low-frequency spectrum versus peers.
Airtel and Vodafone Idea are expected to pick up some spectrum in the 900MHz bands in circles where they need to add capacities to support 4G services.
The 26GHz band is likely to see the most meaningful participation, with all three carriers expected to take up to the maximum permissible limits.
Analysts at Nomura expect Bharti Airtel and Reliance Jio to buy over 1000MHz pan–India in the band, while Vodafone Idea may take in half the circles.
Adani Group is likely to pick up 100MHz in 26GHz airwaves across India, according to analysts, going by the EMD of ₹100 crore. The other possibilities include 400MHz each in Delhi and Mumbai or the same quantum in Gujarat, Maharastra, Tamil Nadu and Karnataka, according to IIFL Securities’ estimates.
The group announced its intent to participate in the spectrum auctions, stating that it will provide private network solutions and enhanced cyber security at the airport, ports and logistics, power generation, transmission, distribution, and various manufacturing operations.
Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less