Bharti Airtel, Reliance Jio to gain share with 5G rollout: Brokerages

On Monday TRAI released recommendations to usher commercial 5G service by recommending 25-50% cut in reserve price for airwaves in various bands

Brokerages anticipate additional market share gains for Reliance Jio and Bharti Airtel which are well positioned to participate in 5G spectrum auctions.

“We believe that Telecom Regulatory Authority of India (TRAI) recommendations are incrementally positive with the regulator recommending spectrum price reductions of 25-50 per cent (though less than telecom companies desired range). Airtel and Jio are well positioned to participate in the upcoming 5G auctions while VIL's ability to effectively compete in 5G auctions is constrained due to the weak balance sheet,” Credit Suisse said in its analysis.

A similar view was echoed by Nomura which said that in the absence of significant fund raising, Vi’s 5G rollout would remain constrained in the near term and this in turn would lead to further market share gains for Jio and Airtel.

On Monday TRAI released a set of recommendations to usher commercial 5G service in the country by recommending 25-50 per cent cut in reserve price for airwaves in various bands. Along with unsold spectrum in previous auction, the regulator has recommended auction of all available spectrum in new bands such as 600 MHz, 3300-3600 MHz and 24.25-28.5 GHz.

Along with reduction in reserve price the regulator has also come out with recommendations on spectrum holding, rollout obligations and payment for acquiring the spectrum.

Nomura believes that the 5G spectrum auction is likely to take place in the first quarter of FY 2023 with probable phased rollouts starting in the second half of the current calendar year.

“Assuming the auctions are completed in 3-6 months, 5G could be launched in India by end-2022 or early-2023. More importantly, a 5G launch within 9-12 months would allow both Bharti and Jio to continue taking share from VIL (whose weak balance sheet will limit 5G investments for now),” UBS Securities said.

While brokerages are upbeat about auctions and rollout of 5G services, industry body Cellular Operators Association of India expressed disappointment with the recommendations. In a statement issued on Tuesday evening it urged the TRAI to revisit the spectrum pricing recommendations, do away with minimum rollout obligations and disallow private enterprise networks.