 "Bharti Airtel")
Bharti Airtel is likely to lead the upcoming auction of eight spectrum bands, as Reliance Jio has intensively acquired spectrum in the 2022 auctions, while Vodafone Idea remains beset with funding issues. The auction will start on May 20.
Given that Bharti Airtel has to renew the licenses for 42MHz of spectrum in 1800MHz and 900MHz band in six circles, the telco is expected to spend Rs 3800 crore at the reserve prices notified by the government, according to analyst notes released by Jefferies and Axis Capital.
The Department of Telecommunications (DoT) had last week notified that by April 22, telecom players will have to submit bids for the auctions which will feature all the available spectrum in 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz, 3300 MHz, and 26 GHz bands.
The auction for 5G airwaves in 2022 had seen high bidding intensity, as telcos made a dash for the new technology. Apart from that, a seven-times higher amount of spectrum was also available.
As a result, 88 percent of Bharti and VIL’s cumulative winning bids were focused on 3,300 MHz and 26 GHz spectrum bands, the note by Axis Capital pointed out.
However, analysts estimate a much lower intensity this time around.
“We estimate Rs 3,800 crore and Rs. 2,500 crore for Bharti and Vodafone Idea (VIL). Jio is unlikely to bid, in our view,” Axis Capital said.
Another reason for the low bid intensity may be that Airtel and Jio’s 5G penetration currently stands at 20 percent of their subscriber bases and network utilization remains relatively low, it added.
The government has set a cumulative reserve price of Rs. 96,317.65 crores for the 10523.15 MHz worth of spectrum put to auction.
Lower end spectrum
A note by Kotak Institutional Equities said the telco could boost sub-GHz spectrum in the existing 800-900 MHz band in select circles.
“Bharti could bid for sub-GHz spectrum in MP, Maharashtra (to complete 10 MHz in 800 band) and in Andhra Pradesh, Gujarat, Karnataka, Rajasthan, Tamil Nadu, Kerala and West Bengal (to reach 5-10 MHz in the 900 band). The overall outlay for sub-GHz top-up could be an additional Rs. 5000 crore (Rs.490 crore annually for 20 years) if Bharti were to go aggressive in the auction, based on reserve prices,” It said.
The DoT has not put up spectrum in the key 600 MHz and 700 MHz bands which were earlier being eyed by Airtel. The costly but super-efficient 700 MHz band is not available as its supply has been exhausted.
In 2022, large chunks of spectrum in the band was picked up by Reliance Jio at an estimated Rs. 39,270 crore. Jio had also acquired 3,300 MHz and 26 GHz spectrum bands, for its plans to launch 5G on standalone architecture (SA) mode.
“We have assumed that Bharti Airtel will be bidding to renew its 900Mhz and 1,800Mhz bands, which were set to expire in February 24 in six circles -- UP (East), West Bengal, Bihar, Orissa, Assam, J&K -- and were administratively located for three months until the auctions start,” Morgan Stanley said in a note.
The telco is set to have a projected incremental spectrum liability of Rs. 5100 crore in FY2025 for Bharti Airtel, it added.
