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Spectrum at reserve price, A Rs 4000-20000 crore auction likely

Analysts expect the maximum spectrum demand of Rs 20,000 crore (USD 2.5 billion) in the forthcoming auction scheduled for June 6.  “We expect maximum spectrum demand of USD 2.5 billion, implying 21 percent of the spectrum value being sold. This is much lower than the value of spectrum sold in any auction since 2014. We do not expect excess demand in any circle/band, implying that spectrum may be sold near reserve prices,” Jefferies said in a research note.

A total of 10,523.15 MHz spectrum across the 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz, 3300 MHz and 26 GHz bands, worth Rs 96,317.65 crore is being auctioned.

Bharti Airtel needs to renew the 42 MHz spectrum in the 1800 and 900 MHz bands in two and six circles, respectively. This would result in a spending of Rs 3,800 crore at reserve prices. “Although Bharti has de-risked its operations by acquiring spectrum in 900/1800MHz bands in previous auctions, we still expect it to renew the bulk of its spectrum in these markets to protect and increase its share. It may also bid in certain circles to increase its holding in 800MHz/1800MHz bands to 10-15 MHz,” said Jefferies. Bharti Airtel has submitted an EMD of Rs 1050 crore. Another analyst expects Airtel to spend a maximum Rs 7,900 crore, as per the previous auctions, as the company has spent 4-8 times of the EMD.

RJio does not need to renew 5G spectrum at this point. The telco has submitted an EMD of Rs 3000 crore. The telco is expected to spend Rs 12000 crore in the auction . “This is 4x its Rs 3,000 crore EMD, in line with the 2-6x ratio of its actual spend and the EMD submitted in previous auctions,” said Jefferies.

Vi has submitted an EMD of Rs 300 crore. “Vi may only renew 900 MHz spectrum in West Bengal. Likely spectrum spend is Rs 200-1000 crore, implying a spend/EMD ratio of 1-3x, lower than 4-9x seen in the past,” said the Jefferies note.

“We assume the upcoming spectrum auction’s success will be limited to renewals, else operators have sufficient spectrum quantities across bands to offer 4G and 5G services,” said an ICICI Securities note.
CT Bureau

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