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A muted spectrum auction expected

On February 8, the Cabinet approved the auction of 10,523.15 MHz of spectrum across bands at a reserve price of Rs 96,317.65 crore.

Initially, the government aimed to generate Rs 5,000 crores from the spectrum auctions. However, DoT has slashed the revenue target to Rs 500 crores for the auction.

With the downward adjustment in revenue expectations from the spectrum auctions, the projected revenues for DoT in FY24 from the telecom sector have been revised to Rs 85,000 crores from the earlier estimate of Rs 90,000 crores. According to a report, contributions from license fees, spectrum usage charges (LF/SUC), and spectrum instalments are anticipated to amount to Rs 50,000 crores for the government.

This adjustment aligns with the sentiments expressed by telecom companies.

Reliance Jio, with no spectrum expiring in the near future across any circle, is unlikely to make significant investments in the upcoming spectrum auctions.

Bharti Airtel has iterated its stance of minimal expenditure in the upcoming spectrum auctions. The focus for Airtel remains on renewing spectrum only in the circles where it faces imminent expiration. This approach contrasts sharply with the substantial Rs 1.5 lakh crore revenue earned by the government in the preceding auctions held in August 2022.

Vodafone Idea (Vi) has yet to deploy 5G infrastructure. The government has reportedly issued a show-cause notice to Vi, questioning why penalties should not be imposed for failing to meet the minimum 5G rollout obligations.

Vodafone Idea (Vi) is unlikely to bid for new spectrum in the upcoming auction and will only renew airwaves that are expiring in the Uttar Pradesh (West) and West Bengal circles, analysts said. “There is a chance that they may not even bid in this auction. Given Vi’s balance sheet constraints, it is difficult to envisage any major spending by them,” according to Vivekanand S, an analyst at Ambit Capital Research.

He said the requirement for Bharti Airtel and Reliance Jio would be very marginal because they already have lots of spectrum.

Vi’s spectrum renewal is due in the 900 MHz in West Bengal and Uttar Pradesh (West) circles, worth over Rs 1,950 crore. These are key priority circles for Vodafone Idea, and the telco will likely look at renewing the licence to secure revenue market share.

Adani Data Networks has been issued a show-cause notice to for non-compliance too.

Among the major players, only Airtel and Jio have launched 5G services and met the stipulated rollout requirements.

CT Bureau

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