Stage set for 5G launch, ICICI Direct

The spectrum auction concluded with the government pocketing Rs 1,50,173 crore (equated annual receipts of Rs 13429 crore for 20 years). As expected, the focus of top 2 telcos was on the core spectrum for 5G, 3300 MHz (mid band) and 26 GHz (millimetre wave band), which attracted maximum bids. The key differential was pan-India bid for 700 MHz spectrum band by Jio to fortify its indoor coverage strength and possibly expand fixed wireless access (FWA) for home broadband services later, albeit at an incremental outlay of Rs 39270 crore. Given the huge quantum of spectrum purchased, the overall weighted spectrum usage charges (SUC) are likely to go down (as zero SUC was notified for new spectrum auctioned along with removal of 3% floor rate) for Jio, Airtel by Rs 2200 crore, Rs 2000 crore, respectively, on annual basis. Also, we expect, ~15% tariff hike by telcos in the near term to compensate for near term cash outflows, as most incremental 5G benefits of industry use cases are still at least two to three years away.

For report, https://www.communicationstoday.co.in/stage-set-for-5g-launch/

CT Bureau