OPEN APP
Home / News / India /  Spectrum auction may not be aggressive
Listen to this article

NEW DELHI : The next round of spectrum auctions starting 26 July is likely to be a short one with bids at reserve prices, industry observers said. This is because no aggressive bidding is anticipated from Reliance Jio, Bharti Airtel and Vodafone Idea, amid the Adani Group decision’s to stay away from the consumer mobility 5G airwaves bands.

“With Adani unlikely to bid in the 3.5GHz spectrum band, there is sufficient spectrum available so as to avoid an intense bidding competition," said analysts at Credit Suisse in a note, assessing the possible bids that carriers can put in the auction for airwaves based on the earnest money deposits submitted to the department of telecommunications.

“We estimate all the winning bids at the reserve prices with overall spectrum outlay of potentially 1 trillion," said analysts at Nomura Global Markets Research in a note issued on 19 July. According to brokerage houses’ notes to clients, several strong factors support this prediction.

One, Adani Data Networks will skip the consumer 5G spectrum category as it will only pick up airwaves for captive or enterprise use in a few circles. Adani Data Networks has put in the lowest earnest money deposit (EMD) of 100 crore for participating in the upcoming 5G spectrum auctions, indicating that it can buy airwaves amounting to about 650-700 crore, excluding any consumer mobility play.

“Adani’s low EMD implies this bidder’s spend can be a mere 9 billion/US$120m and that spectrum buying will likely be limited to lowest-priced 26GHz spectrum band. Consequently, Adani poses no risk to telcos seeking 5G spectrum in this auction," analysts at CLSA Securities said.

The group may start off with captive networks, as stated, but such limited spectrum may restrict its ability to offer services to other enterprises, said analysts at IIFL, adding captive services would be limited to four or five circles.

“We see very low chances of Adani getting into consumer 5G, as both greenfield rollout and a potential acquisition of Vi would entail significant investments and low returns," they added, referring to market speculation that Adani Group would eventually buy out loss-making No. 3 carrier Vodafone Idea, which has a net debt of 1.9 trillion on its books.

The second reason for the auction to be a quick one is that more than adequate spectrum is available for the three carriers in the coveted 3.5 GHz and 26 GHz bands which will be used for 5G services, analysts said. According to DoT, existing telecom players Reliance Jio, Bharti Airtel and Vodafone Idea have submitted earnest money deposits of 14,000 crore, 5,500 crore and 2,200 crore respectively, which brokerage houses said would be used primarily for buying 5G airwaves by all three carriers.

“The highest amount of spectrum available per player for 5G bands on a pan-India basis would be worth 489 billion ($6.1 billion). Assuming both Rjio and Bharti Airtel bid to the maximum extent allowed, there would still be enough spectrum left to satisfy the maximum amount that the other two players can bid," said analysts at Morgan Stanley in a note seen by Mint.

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Close

Recommended For You

×
Edit Profile
Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout