Spectrum auctions: Bharti Airtel likely to edge past Reliance Jio

While Jio has fronted the highest earnest money deposit, it is not expected to bid the most

Bharti Airtel may end up cumulatively bidding for more spectrum than market leader Reliance Jio in the upcoming auctions. This is owing to its need for spectrum renewal, and a requirement for 900 MHz in a few circles, analysts have said.

Despite the muted bidding expected in the upcoming auctions, Airtel may end up making more bids than Jio, they added.

“While Bharti and Vodafone Idea (Vi) have 900 MHz renewal in a few circles, Bharti may also use the opportunity to strengthen its sub-1 GHz holdings,” a note by IIFL Securities said.

The investment advisory firm expects Airtel's spectrum outlay of Rs 10,400 crore to dwarf the Rs 900 crore outlay for Jio and the Rs 1,200 crore for Vi. In case telcos opt for the most-relaxed payment option, government receipts in FY25 would be Rs 1,200 crore, it said.

Given that Bharti Airtel has to renew the licence for at least 42 MHz of spectrum in 1800 MHz and 900 MHz bands across 6 circles, the telco would be spending Rs 3,800 crore at reserve prices, analysts had predicted in March after the auctions were notified.

Meanwhile, Jio may pick up much less spectrum than it initially indicated.

“With Jio already possessing adequate spectrum, it may bid for the 1800 MHz band only in four circles despite having posted the highest earnest money deposit (EMD).

Reliance Jio has deposited the most — Rs 3,000 crore — followed by Rs 1,050 crore by Bharti AIrtel and Rs 300 crore by Vi. Telcos can bid for spectrum worth up to 12 times their EMD.

“A telco cannot bid for more spectrum than the level determined by the EMD. However, a high EMD can be used to signal intent. It also gives flexibility to a telco to bid even for far lower spectrum than the level determined by the EMD as it is refundable if a telco bids for at least the minimum spectrum in one circle,” IIFL said.

Airtel and Vi have some pre-2010 administered spectrum coming up for renewal, which is not the case for Jio, a note by Axis Capital pointed out.

“With low 5G penetration, adequate spectrum supply by the DoT, and periodic auctions, we do not expect the bid intensity to be high,” it stressed.

Muted expectations

The upcoming spectrum auctions will be held on June 6. All unsold spectrum from the last sale will be up for bidding again.

Airwaves in the 800, 900, 1800, 2100, 2300, 2500, 3300 MHz and 26 GHz bands, covering a large chunk of voice and data spectrum, are up for sale.

Jio is widely expected to give the 800MHz band a miss, given that it is mostly unsold spectrum from 2022, analysts believe.

DoT is auctioning spectrum in eight bands in 2024 against 10 in 2022.

The two bands missing from 2022 are 600MHz, which found no takers in 2022, and 700MHz where the supply is limited. This comes after Jio’s purchases in 2022 and subsequent allotments to public sector undertakings.

The costly but super-efficient 700 MHz band had seen intense bidding in 2022 with large chunks picked up by Jio at an estimated Rs 39,270 crore.