Given that Vodafone Idea is still having financial difficulties and Reliance Jio has been actively acquiring spectrum in the 2022 auctions, Bharti Airtel is probably going to lead the forthcoming auction of eight spectrum bands. On May 20, the auction will get underway.
According to analyst notes published by Jefferies and Axis Capital, Bharti Airtel is anticipated to spend Rs 3800 crore at the reserve pricing announced by the government in order to renew the licenses for 42MHz of spectrum in the 1800MHz and 900MHz band in six circles.
The telecom companies were alerted last week by the Department of Telecommunications (DoT) that bids for the auctions, which will include all of the available spectrum in the 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz, 3300 MHz, and 26 GHz bands, must be submitted by April 22.
There was fierce competition for 5G airwaves in the 2022 auction as telecommunications companies rushed to acquire the new technology. In addition, there was seven times as much spectrum accessible.
Consequently, the Axis Capital statement noted that 3,300 MHz and 26 GHz spectrum bands accounted for 88% of Bharti and VIL's total winning bids. Analysts predict a significantly lesser intensity this time around, though.
"Our estimates for Bharti and Vodafone Idea (VIL) are Rs. 3,800 crore and Rs. 2,500 crore, respectively. We don't think Jio will submit a proposal," Axis Capital stated.
It further stated that the fact that network usage is still quite low and that only 20% of Airtel and Jio's customer bases have access to 5G technology could be another factor contributing to the low bid intensity.
The total reserve price established by the government for the 10523.15 MHz spectrum up for sale is Rs. 96,317.65 crores.
Lower End of the Spectrum
The telecom company might expand sub-GHz spectrum in specific circles inside the current 800-900 MHz range, according to a note from Kotak Institutional Equities.
“Bharti may submit a bid for sub-GHz spectrum in West Bengal, Andhra Pradesh, Gujarat, Karnataka, Rajasthan, Tamil Nadu, Kerala, and MP, Maharashtra (to reach 5–10 MHz in the 900 band). If Bharti were to bid aggressively in the auction, the total cost for sub-GHz top-up might be an extra Rs. 5000 crore (or Rs. 490 crore every year for 20 years), depending on reserve prices,” It said.
The important 600 MHz and 700 MHz bands, which Airtel had previously been eyeing, have not had any spectrum added by the DoT. The supply of the expensive but incredibly efficient 700 MHz band has run out, so it is not available.
Large portions of the band's spectrum were acquired by Reliance Jio in 2022 for an estimated Rs. 39,270 crore. In addition, Jio purchased spectrum bands at 3,300 MHz and 26 GHz in preparation for the deployment of 5G in standalone architecture (SA) mode.
“Since the 900 MHz and 1,800 MHz bands in six circles - UP (East), West Bengal, Bihar, Orissa, Assam, and J&K— were scheduled to expire on February 24 and were administratively located for three months prior to the start of the auctions, we have presumed that Bharti Airtel will be bidding to renew them,” Morgan Stanley said in a note.
It further stated that in FY2025, the telecom is expected to incur an additional spectrum liability of Rs. 5100 crore for Bharti Airtel.
