Spectrum Auction A Damp Squib On Low Demand From Bidders

In just two days, India's second 5G spectrum sale concluded on Wednesday, raising less than 12% of the minimum Rs 96,238 crore the government had projected for the deal.

The two-day auction saw a sale worth Rs 11,340 crore.

A total of 10 GHz of spectrum ranging from 800 MHz to 26 GHz was offered to telecom players. The offer was for radio waves that carry voice and data signals for mobile phones in the bands of 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz, 2,500 MHz, 3,300 MHz and 26 GHz.

Analysts anticipated a muted demand for spectrum.

The auction was "business as usual" and "nothing like the big bang 5G rollout auction", said Balaji Subramanian, vice president of research at IIFL Securities, told NDTV Profit in a televised interview on Tuesday.

"Although Bharti Airtel and Vodafone are looking to renew their expired spectrums, only Rs 12,000–13,000 crore worth of spectrum will get sold, is what I think," Subramanian said.

In terms of specific companies, Subramanian expects Vodafone Idea to "participate in circles where they need renewals and extra capacity for data, but nothing big."

Vodafone Idea will participate in an "opportunistic manner" since they already own a fair bit of spectrum, and that is one of the reasons their debt went up, he said.

"A lot of their spectrum can be reformed for 4G and 5G. Their requirement is low unless they're thinking like Reliance and Jio to offer a 5G standalone network," Subramanian said.

In 2022, a record-breaking Rs 1.5 lakh crore worth of 5G telecom spectrum was auctioned off at the seven-day event. The top bidder, Jio, owned by Mukesh Ambani, secured about half of the airwaves (worth Rs 88,078 crore).

"Telecom sector has been in favour because of the anticipated price hike in the near future. You can expect a 15-20% price hike in the next few months, which will flow through to fiscal 2025 average revenue per user numbers," the researcher said.

He expects Vodafone Idea Ltd., Bharti Airtel Ltd., and Bharti Hexacom Ltd. to stay strong even during the tariff hike. "If the Supreme Court's verdict on the adjusted gross revenue case is in favour of Bharti (Airtel) and Vodafone (Idea), the market reaction should also be positive," he said.

Subramanian also mentioned that he sees room for upside for Indus Towers Ltd.