According to the IIFL securities report, Reliance Jio will spend Rs 37,500, Airtel will spend Rs 25,000 and Vodafone-Idea will spend Rs 850 for future spectrum auctions.
The report estimates the total bid to be Rs. 710 billion, and if all three telephone companies choose the option of paying in installments over 20 years, the government will receive Rs 62 billion in revenue in fiscal year 2023. Become.
According to the report, Telcos will miss the expensive 700MHz band as it has been waiting for further reductions, even though the base price has been reduced by 40%. 700 MHz is the main low frequency 5G band that provides higher indoor coverage, requiring fewer towers in rural areas.
This bandwidth is also the key to providing use cases that result from network slicing and standalone 5G. As a result, the report predicts that carriers are likely to use their existing 4G cores to provide 5G services in a non-standalone (NSA) configuration in the short term.
The 3.6GHz band, the mainstream 5G band that supports the 842 smartphone model, can weaken the response after allowing the telecommunications sector to allocate the spectrum directly to the enterprise for private captive networks. It may dilute potential revenue opportunities. Analyst report.
The report predicts that both Reliance Jio and Airtel may bid on the 50MHz block in the 3.6GHz band, and Vodafone-Idea may bid on the 20MHz block.
Reliance Jio and Airtel can also increase their possession of radio waves below 1GHz by bidding on the 850MHz and 900MHz bands, respectively. Jio could increase its 850MHz hold to 15MHz, but Airtel could bid on the 900MHz band in some key circles to complete its 10MHz or 5MHz footprint, the report said. I am.
The 28GHz band used for high-speed, low-latency millimeter-wave 5G can be of interest to carriers as DoT has abolished its band’s spectral usage (SUC).
IIFL Securities expects “tremendous value” from telcos that acquire the 28GHz spectrum that can be used to provide fixed wireless access (FWA) services that are difficult to deploy fiber to the home. In addition, acquiring the spectrum in the 28 GHz band saves telcos significant annual savings in SUC.
“Currently, the three telephone companies have a pan-Indian spectrum (pair equivalent) of 40-48MHz on a weighted average basis and pay 3.7-4.9% SUC of the adjusted total revenue. The telephone company acquires 28GHz of 1x1000MHz. At 500 MHz, which is 10-12 times the current holdings of the pair’s equivalent spectrum, the SUC will be zero, which will reduce the weighted average SUC to less than 0.5%, “the report states. ..
The potential benefits of SUC reduction by acquiring the 28 GHz band could bring EVs of $ 3.7 billion, $ 3.4 billion and $ 1.2 billion for Reliance Jio, Airtel and Vodafone-Idea, respectively.
DoT has abandoned SUC for future auction incremental spectrum purchases through the September 2021 Relief Package. We also discarded the 3% floor of SUC in a memo on Wednesday.
“Don’t expect a bid war. 330Mhz in the midband spectrum of 3300MHz is available in all circles and operators only need 100Mhz to deploy Pan India. This is enough spectrum for 3 operators. Means that you can use it, “JP Morgan said in a memo.
The 2022 5G auction also comes with additional sweeteners, including significantly more flexible payment terms, lower interest rates on NPV storage compared to previous auctions, and no SUC for purchasing fresh spectra.
IIFL analysts predict that there will be no bids for these bands due to the appropriate supply of carriers in the 1800, 2100, 2300, and 2500 MHz bands.
Reliance Jio and Airtel may also easily see the debt-to-Ebitda ratio triple, but analysts expect double-digit Ebitda growth to slow this soon.
DoT is also reducing the spectrum auctioned from the level proposed by India’s Telecommunications Regulatory Authority (TRAI). Some spectra are reserved for government-owned BSNL, but DoT is reducing the spectrum in the 600, 700, 900, 3.6 GHz, and 28 GHz bands, but increasing supply in the 850 MHz band. ..
Despite the reduction from the level proposed by TRAI, the spectrum auctioned is 2214 MHz. This is almost 13 times the current spectrum unfolding throughout India.