Going by the earnest revenue deposited with the division of telecommunications (DoT) final week, telcos are most likely to bid conservatively at the spectrum auctions in March. Based on the deposits of Reliance Jio, Bharti Airtel and Vodafone Idea, the total quantity bid would be about Rs 86,290 crore, and going by the upfront payment that the operators would make, the government would be capable to realise about Rs 43,145 crore.
Add to this, about Rs 20,000 crore earned annually from licence costs and spectrum usage charges, and the government would be capable to realise its budgetary target of Rs 53,986.72 crore from telecom receipts. Still, the quantity would be far brief of Rs 3.92 lakh crore, which is the worth of total spectrum becoming place up for auctions, based on the reserve value.
While neither telcos nor the DoT have disclosed the EMD quantity, sources indicated that Jio’s deposit of about Rs 9,000 crore is the highest followed by Bharti Airtel’s Rs 3,000-3,500 crore. Vodafone Idea has created the smallest deposit of about Rs 500 crore.
The deposits indicate Jio would be renewing spectrum expiring later this year and also purchasing more to fill the gaps and to leverage its current spectrum holding to the maximum. Bharti Airtel may possibly not renew all that is expiring this year but is most likely to get new spectrum in some 4G bands, though Vodafone Idea may possibly get some new spectrum but is unlikely to renew what is expiring.
Also, none of the operators are going to bid for the premium 4G spectrum in the 700 MHz band since of the higher reserve value. This signifies that for the second time – the 1st time this band was place up for auction was in 2016 – there would be no takers for this band.
Reliance Jio requires to renew the most significant chunk of its spectrum – its 81.25 MHz in 800 MHz band, which is utilised for delivering 4G services, is expiring later this year. So, it is positive to bid for adequate spectrum in this band as it requires to have 10 MHz in just about every circle. In addition, it is most likely to get more spectrum in 1800 MHz and 2300 MHz band in order to construct a portfolio of 10 MHz and 40 MHz, respectively. With this method, Jio will finish up expanding its 4G spectrum from the current 23.4 MHz to 40.82 MHz – a 74.4% enhance.
The company’s total outflow is most likely to be Rs 57,790 crore at the reserve value. Since operators have the solution of paying 25% of the total quantity bid for spectrum under 1GHz like 800 MHz and 900 MHz, and 50% of the total quantity bid for spectrum above 1GHz like 2,300 MHz, 2,500 MHz its upfront payment could be about Rs 28,895 crore.
In the case of Bharti Airtel, a total of 57.60 MHz is expiring later this year, of which bulk 51.40 MHz is in 1800 MHz and 6.20 MHz is in the 900 MHz band. The business is most likely to go for spectrum in 900 MHz to full a block of 5/10 MHz in just about every circle. Also, it is most likely to attempt to take more spectrum in 1800 MHz (to full 15 MHz), 2100 MHz (to full 10 MHz), and 2300 MHz band (to full 40 MHz). Its total outflow is most likely to be Rs 25,000 crore at the reserve value and if its pays 50% of the quantity upfront, its instant outflow will be about `12,500 crore.
For Vodafone Idea, a total 51.05 MHz spectrum is expiring, of which once again bulk of 51.05 MHz is in 1800 MHz though 6.20 MHz falls in the 900 MHz band. It is most likely to opt for spectrum in 900 MHz to full a block of 5 MHz in just about every circle. Also, it may possibly attempt to take more spectrum in 1800 (to full 10 MHz), 2100 (to full 10 MHz) and 2500 MHz band (to full 20 MHz).
Its total outflow is therefore most likely to be Rs 3,500 crore at the reserve value. At the 50% upfront payment, its instant outflow is most likely to be about Rs 1,750 crore.