5G spectrum auction may see muted bidding

Synopsis

They added that another damperner for the auctions is the business uncertainty around future 5G enterprise revenue streams for telcos following the government’s decision to allow direct spectrum allotments to enterprises for captive 5G networks.

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The upcoming 5G airwaves sale starting late-July is likely to see muted bidding, that too mostly at base prices, given that there is ample spectrum on sale, auctions are expected annually and only two major bidders-Reliance Jio and

– are in play with

(Vi) still struggling financially, say analysts and industry executives.

They added that another damperner for the auctions is the business uncertainty around future 5G enterprise revenue streams for telcos following the government’s decision to allow direct spectrum allotments to enterprises for captive 5G networks.

“Don’t expect a bidding war. 330 MHz of the mid-band spectrum of 3300 MHz is available in every circle and an operator requires only 100 MHz for pan India rollout. This means more than adequate spectrum is available for the three operators,” JP Morgan said in a note.

Brokerage Kotak said that reserve prices are higher than what was sought by telcos. It added that the move to allow enterprises to directly obtain spectrum to set up captive private networks is a “concerning situation given that the 5G opportunity is a play on enterprise solutions rather than retail consumers…”

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Analysts said that earlier, in a spectrum-scarce era with a large number of telcos, players had often over-spent in a bid to reserve good quality airwaves to create an edge in network quality and customer experience.

“But now with merely three players with only two of them looking for serious investments, and government’s plan to offer spectrum through an annual schedule, there seems to be limited need to invest at a high price,”

said.

An industry executive familiar with the telcos’ spectrum bidding strategies estimates that Jio, Bharti

and Vi could spend around ₹46,000 crore, ₹41,000 crore and ₹27,000 crore, respectively, to buy 5G airwaves in the upcoming auction.

If these estimates are correct, this could mean the government would net only ₹1.14 lakh crore from this year’s auction, out of the roughly ₹4.5 lakh crore of airwaves on sale, and that a majority of the airwaves would go unsold.

At press time, Airtel, Jio and Vi did not respond to ET’s queries.

The executive said that Mukesh Ambani-led Jio is likely to focus more on airwaves in the 800 MHz and 1800 MHz bands, while Sunil Mittal-led Airtel may bulk up on spectrum in the 900/1800 MHz bands. Vi, financially the weakest private telco, too is expected to chase airwaves primarily in the 900/1800 MHz bands.

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