Spectrum Auction 2024: Here's What To Expect
Jio has the highest bid potential of Rs 36,000 crore, but it requires the spectrum the least.
The auction of spectrum will begin on Tuesday, with the Union government set to put airwaves worth Rs 96,317.7 crore on the block.
Bharti Airtel Ltd., Reliance Jio Infocomm Ltd. and Vodafone Idea Ltd. have cumulatively deposited an earnest money of Rs 4,350 crore, according to Antique Stock Broking, implying a muted demand for spectrum.
Successful bidders need to make payment within 10 days and will be allowed to make payment in 20 equal annual instalments at an interest rate of 8.65%. The maximum limit for bids is 12 times the earnest money deposited by the company, according to the auction rules of the Telecom Regulatory Authority of India.
The spectrum will be assigned for 20 years and after a minimum of 10 years, the telecom companies will also have the option to surrender the spectrum they acquired through the auction, as per the rules.
Jio has the highest bid potential of Rs 36,000 crore, but it requires the spectrum the least. The Mukesh Ambani-owned company had aggressively bought spectrum in the previous two auctions and no spectrum is up for renewal. The telecom company has a portfolio of spectrum in the sub-GHz band, aggregating 5x20MHz spectrum in the 700MHz and 800MHz bands.
It is also a leader in the low-band spectrum that is considered for propagation and coverage, with 50% of the total holding, according to Axis Capital.
Bharti Airtel is the second largest at 20%. VIL is not too far behind at 16% as it aggressively bids to win back its original spectrum holding in these bands during the 2014 and 2015 spectrum auctions.
Airtel has renewals for 42 MHz of spectrum in the 1,800 MHz and 900 MHz bands in six circles, Jefferies India Pvt. said. "At the reserve price, this would result in spending of Rs 3,800 crore."
However, it may also bid in certain circles to increase its holding in the 800MHz/1,800MHz bands to 10–15MHz and in the 2,300MHz band to 40MHz, leading to a maximum spend of Rs 12,300 crore, Jefferies said.
VIL, which concluded a Rs 20,000-crore fundraise recently, may also look to renewals for the 12 MHz of spectrum in the 1,800 MHz and 900 MHz bands in two circles, with a total spend of Rs 1,500 crore, according to Jefferies.
Among the high revenue potential states, VIL's bandwidth is relatively less in the Andhra Pradesh and Madhya Pradesh regions in the 900 MHz category, Antique Stock Broking said in a note. It may decide to fill such weak areas or may decide to opt for spectrum in the 26 GHz category, where there is further scope to reduce the spectrum usage charges as a percentage of revenue. The company's maximum bidding potential is limited to Rs 3,600 crore.
