Telecom operators poured in bids worth Rs 1.45 lakh crore for spectrum in 5G and other bands on the first day of auction. Telecom minister Ashwini Vaishnaw said that the first-day proceeds surpassed the government’s internal estimates.

Telecom operators poured in bids worth Rs 1.45 lakh crore for spectrum in 5G and other bands on the first day of auction. Telecom minister Ashwini Vaishnaw said that the first-day proceeds surpassed the government’s internal estimates. However, the amount did not exceed the reserve price in any of the bands. According to analysts at ICICI Securities, Spectrum auction day-1 concluded on a negative note as operators picked spectrum worth Rs 1.45 lakh crore, which reflects a modicum of investment indiscipline. Mukesh Ambani’s Reliance Jio has likely bid highest for spectrum worth Rs 80,100 crore, and likely opted for 10MHz airwaves in 700MHz band. Meanwhile, Bharti Airtel may have bid for spectrum worth Rs 45,000 crore and spent 20% more than analysts’ base case.

High price bidding for 700MHz a drag for telecom industry

Telecom minister Ashwini Vaishnaw said that the first-day proceeds surpassed the government’s internal estimates. However, the amount did not exceed the reserve price in any of the bands. The amount garnered is the highest so far, crossing the Rs 1.09 trillion received in the 2015 auctions, he said. The bids received have been for spectrum across 700MHz, 800MHz, 900MHz, 1800MHz, 2100MHz, 2500MHz, 3300MHz and 26GHz bands. ICICI Securities’ base case assumption was that the 700MHz band will remain unsold in this auction. “Hence operators bidding for 700MHz at such high prices is a drag for the industry as it structurally reduces RoIC,” it said.

Cautious on higher investments in India telecom

Analysts at ICICI Securities said that operators’ priority would be to drive RoIC and cashflows higher, but “spectrum auctions have never been easy,” they said. Spectrum spend by market leaders such as Reliance Jio, Bharti Airtel is significantly higher than expected, and this would require the industry to grow faster in order to justify such large investments. “This has not been true in most geographies across the globe, and higher spectrum investment has been seen to depress RoIC for the industry. Therefore, we would remain cautious on the higher investments in India telecom,” the brokerage said.

According to ICICI Securities’ analysis, Reliance Jio may have spent Rs 80,100 crore for spectrum purchase, which is more than 2x its base case estimate. The analysis indicates that the higher spend is largely for buying 700MHz spectrum band where it has probably picked 10MHz pan-India for Rs 39300 crore. Sunil Mittal’s Bharti Airtel may have bid for spectrum worth Rs 45,000 crore. Bharti is likely to have bought 13MHz spectrum in the 900MHz band in C’ circles, where it had a spectrum gap, per the report. “Our base case estimate was a spend of Rs 38,000 crore in the auction, and we did not factor any need in 1800MHz and 2100MHz bands. Therefore, the spend is 20% higher than our base case,” it said.

Meanwhile, Vodafone Idea is likely to have spent Rs 18,400 crore for spectrum. “As expected, VIL seems to have purchased 50MHz spectrum in 3300MHz band in 17 circles for Rs 15,200 crore; and 400MHz spectrum in 26GHz band in 16 circles for Rs 2,600 crore. It appears to have added 10MHz spectrum each in Andhra Pradesh and Punjab in 2500MHz band for Rs 650 crore. VIL’s total spend is within our base case assumption,” the brokerage noted. Gautam Adani-led firm Adani Data Networks is likely to have bought spectrum worth Rs 900 crore. “It appears Adani has bought 26GHz spectrum in 20 circles (except in Delhi and Kolkata), and its total spectrum purchase could be 3350MHz for Rs 900 crore. Our estimate is provisional data does not reflect the entire purchase by Adani. We believe it should have purchased 200MHz spectrum in all circles except Gujarat where it would have bought 400MHz,” the brokerage said.

Telecom industry getting converted to sunrise industry: Ashwini Vaishnaw

Describing the participation by all four bidders as ‘strong’, Ashwini Vaishnaw said the auction saw healthy participation. The response shows that the industry has turned from its difficult time caused by litigation, he added. “Now industry is getting converted to sunrise industry… Bids of about Rs 1,45,000 crore show that the industry is moving towards positive territory, now new investments will come, service quality will improve, and new technology will be introduced,” the minister said.

https://www.financialexpress.com/industry/reliance-jio-likely-bid-highest-for-5g-spectrum-at-rs-80100-cr-total-bid-amount-tops-rs-1-45-lakh-cr/2607738/?utm_source=newzmate&utm_medium=email&utm_campaign=femain&pnespid=GO04pV4C4HoYhEnK5o_OCR5Rr0gzybtl8ApCF7MIOY.K7wib0_e14O6VlzIcNP7kz1Ush3PG