India Sells Spectrum Worth Rs 77,000 Crore As Operators Add 4G Capacity, Focus On 5G
India sells telecom spectrum at 1.5 times the estimated value in the auction.
India sold telecom spectrum worth worth Rs 77,147 crore as operators look to add 4G capacity and focus on 5G. Reliance Jio Infocomm Ltd. led the demand, according to reports, followed by Bharti Airtel Ltd.
The Department of Telecommunications received bids for 849.2 megahertz of spectrum in the auction, according to a statement. It was sold at more than 1.5 times the pre-bid estimate of Rs 45,000 crore.
Bids were received in 800MHz, 900MHz, 1,800MHz, 2,100MHz and 2,300MHz bands. None of the operators bid for 700MHz and 2,500MHz bands. While operators stayed away from 700MHz band due to its high pricing, most other bids were placed around the reserve price, indicating muted competition.
According to a Morgan Stanley report:
2,300MHz band saw demand in all circles.
1,800MHz band received bids for 21 out of 22 circles.
800MHz saw demand in 19 out of 22 circles.
900MHz saw demand in nine out of 19 circles.
With sufficient spectrum available with operators in the 2,100MHz band, there was a limited activity with demand in only three out of 19 circles.
The demand in most of the circles was below the spectrum available, Axis Capital said in a report. Despite this, the bid amount is higher than the expected as carriers look to add capacity for 4G and prepared ground for 5G by adding spectrum in the 2,300MHz band.
Jio seems to have bid for most of the 800MHz and a large part of the 2,300MHz spectrum. The 2,300MHz band is used to increase 4G capacity and is in demand for 5G deployment due to its better coverage, the report said.
Bharti Airtel acquired 355.45MHz spectrum across sub-GHz, mid-band and 2,300MHz bands for Rs 18,699 crore, the company said in its statement.
According to a Goldman Sachs report, Reliance Jio has likely spent the most in the auction at around Rs 50,000 crore, followed by Bharti Airtel Ltd. The report said Vodafone Idea Ltd. renewed its spectrum by spending around Rs 3,000 crore.
ICICI Securities said citing its analysis that Bharti Airtel completed 5MHz spectrum in the 800MHz band in five circles—Delhi, Mumbai, Maharashtra, Andhra Pradesh, and Haryana. The company purchased additional spectrum in the 900MHz band, which will be up for renewal in 2024.
Bharti Airtel’s bidding was focussed on strengthening the sub-GHz spectrum, and capacity spectrum in 2,300MHz. Vodafone Idea’s bidding is seen in line with the bid for 900MHz spectrum in Tamil Nadu, which will cost Rs 1,180 crore, and 5MHz spectrum each in 1,800MHz band in Andhra and Uttar Pradesh-East for a total sum of Rs 2,160 crore, the brokerage said.
According to Axis Securities, the cash outgo will be keenly watched by the street given the high debt level of incumbents and continued delay in tariff hike. “This may also lead to funding gap concern for Vodafone Idea, given the continued delay in raising funds and renewed pricing aggression in some segments of the sector.”
