Govt could get record revenues from spectrum auction, say analysts

The upcoming spectrum auction could turn out to be the best spectrum sale for the government in terms of revenues with analysts expecting operators to offer between ₹1.20 lakh crore and ₹1.5 lakh crore for 5G airwaves.

“In the spectrum auctions starting July 26, we expect spectrum to be sold near reserve prices and estimate demand to range $13-20 billion versus $54 billion worth of spectrum being sold. Operators will bid for 5G networks, reducing SUC rates and enhancing existing spectrum, resulting in demand mainly led by 3.3GHz/26GHz spectrum bands,” said analysts at brokerage firm Jefferies.

Jio tops the table
Jio will lead spends followed by Bharti. There will be limited spends from Vodafone Idea and Adani Group.

The government will auction 73GHz spectrum across 10 bands. The spectrum prices have been reduced across bands with 600/700/800/900MHz bands now being similarly priced. Pricing in the mid-band spectrum (1800/2100MHz) is also similar.

“Easier payment terms (20 equal installments instead of 30-50 per cent upfront payment) and an attractive interest rate of 7.2 per cent on deferred payments will boost telco spends in this auction.,” Jefferies added.

“We expect operators to bid for spectrum for rolling out 5G networks, lowering blended SUC rates (26GHz) and enhancing existing spectrum. We see limited demand for 600MHz/2100MHz/2500MHz bands. Telcos may look at 700MHz more closely as it is the primary sub-GHz band for 5G globally, it is available pan-India and its price is similar to 800/900MHz. Incumbents may also bid more aggressively for spectrum in 3.3GHz/26GHz to crowd out Adani,” it added.

Reliance’s focus
Analysts expect Reliance Jio to focus on 800MHz/3.3GHz. “We expect Reliance Jio to enhance its spectrum in 800MHz and 1800MHz bands to 10-15MHz in each market. We also expect Jio to buy a minimum 100MHz in 3.3GHz band and 800MHz in 26GHz band across all markets,” Jefferies said. The Hindu BusinessLine