 "Auction was all about 4G, data")
Ever since Reliance Jio launched its commercial services, the telecom market in India has been trying to up its game in 4G. The just-concluded spectrum auction was no different as it witnessed most activity for 4G bands.
Telcos were primarily interested in sprucing up their 4G footprint, analysts said a day after the bidding concluded. Major operators, including Jio, now have a pan-India footprint of wireless broadband spectrum allowing them to offer high-speed 3G and 4G services.
Bharti Airtel acquired 173.8 MHz spectrum in 1,800/2,100/2,300 MHz bands for Rs 14,244 crore. The telco now has 4G and 3G spectrum in all the 22 circles. Vodafone, which spent about Rs 20,000 crore to get spectrum in 1,800/2,100/2,500 MHz bands, will now have 4G airwaves in 17 circles, covering 90 per cent of its total revenues and 94 per cent of mobile data revenues.
According to a Bank of America Merrill Lynch report, as the top three incumbent telcos now have adequate 4G spectrum, it will make it difficult for Jio to poach their subscribers. “We now see faster consolidation among smaller operators given the lack of data spectrum,” the report said.
The auction witnessed aggressive bidding for 4G airwaves with 2,300 MHz band being fully sold out and intense bidding in some circles in the 1,800-MHz band. Vodafone and Idea, which have so far been offering 4G on 1,800 MHz, bought spectrum in the 2,500 MHz band.
“We are surprised by the demand for 2,500 MHz band given a still nascent device ecosystem in India,” Goldman Sachs said. However, Himanshu Kapania, managing director of Idea Cellular, said the ecosystem would be developed fast as China and some other countries have already started deploying 2,500 MHz.
The biggest ever spectrum auction, in terms of the quantum and value of spectrum put to auction, concluded with around 60 per cent airwaves remaining unsold. In value terms, the government garnered only 12 per cent of the spectrum valued at Rs 65,789 crore against Rs 5,67,328 crore worth of spectrum put to auction.
“Spectrum acquisition for bolstering the data capabilities has been the theme of these auctions. However, despite the modest participation, post the auctions, the debt levels of the industry would remain elevated at an estimated level of Rs 4,25,000 crore. We estimate the industry debt/OPBDITA (operating profit before depreciation, interest, tax and amortisation) to remain weak,” ICRA said.
ICRA added that although 700 MHz band has higher efficiency for data services, it was expensively priced and the ecosystem around the band is not fully developed, which resulted in no participation in this band. The auction participation was also muted because, compared to the past auctions, the telcos did not face any spectrum expiry risks this time and focused largely on filling the gaps in their spectrum holdings, primarily for data services.
Kotak Institutional Equities said as the industry has placed its bets largely on one variable – data volumes, any disappointment on that front could mean a long phase of sub-par industry economics.
WHO BAGGED WHAT Jio has enhanced capacity by buying additional spectrum in 2,300/1,800/800-MHz bands for Rs 13,672 crore
Telcos were primarily interested in sprucing up their 4G footprint, analysts said a day after the bidding concluded. Major operators, including Jio, now have a pan-India footprint of wireless broadband spectrum allowing them to offer high-speed 3G and 4G services.
Bharti Airtel acquired 173.8 MHz spectrum in 1,800/2,100/2,300 MHz bands for Rs 14,244 crore. The telco now has 4G and 3G spectrum in all the 22 circles. Vodafone, which spent about Rs 20,000 crore to get spectrum in 1,800/2,100/2,500 MHz bands, will now have 4G airwaves in 17 circles, covering 90 per cent of its total revenues and 94 per cent of mobile data revenues.
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Idea Cellular, is paying Rs 12,798 crore for acquiring spectrum in 1,800/2,100/2,300/2,500 MHz bands, will now be equipped to offer 4G services in 20 circles. Jio, which already had a 4G footprint across the country, too, has enhanced capacity by buying additional spectrum in 2,300/1,800/800 MHz bands for Rs 13,672 crore.
According to a Bank of America Merrill Lynch report, as the top three incumbent telcos now have adequate 4G spectrum, it will make it difficult for Jio to poach their subscribers. “We now see faster consolidation among smaller operators given the lack of data spectrum,” the report said.
The auction witnessed aggressive bidding for 4G airwaves with 2,300 MHz band being fully sold out and intense bidding in some circles in the 1,800-MHz band. Vodafone and Idea, which have so far been offering 4G on 1,800 MHz, bought spectrum in the 2,500 MHz band.
“We are surprised by the demand for 2,500 MHz band given a still nascent device ecosystem in India,” Goldman Sachs said. However, Himanshu Kapania, managing director of Idea Cellular, said the ecosystem would be developed fast as China and some other countries have already started deploying 2,500 MHz.
The biggest ever spectrum auction, in terms of the quantum and value of spectrum put to auction, concluded with around 60 per cent airwaves remaining unsold. In value terms, the government garnered only 12 per cent of the spectrum valued at Rs 65,789 crore against Rs 5,67,328 crore worth of spectrum put to auction.
“Spectrum acquisition for bolstering the data capabilities has been the theme of these auctions. However, despite the modest participation, post the auctions, the debt levels of the industry would remain elevated at an estimated level of Rs 4,25,000 crore. We estimate the industry debt/OPBDITA (operating profit before depreciation, interest, tax and amortisation) to remain weak,” ICRA said.
ICRA added that although 700 MHz band has higher efficiency for data services, it was expensively priced and the ecosystem around the band is not fully developed, which resulted in no participation in this band. The auction participation was also muted because, compared to the past auctions, the telcos did not face any spectrum expiry risks this time and focused largely on filling the gaps in their spectrum holdings, primarily for data services.
Kotak Institutional Equities said as the industry has placed its bets largely on one variable – data volumes, any disappointment on that front could mean a long phase of sub-par industry economics.
WHO BAGGED WHAT
- Bharti Airtel acquired 173.8 MHz spectrum in 1,800/2,100/2,300 MHz bands for Rs 14,244 crore. It now has 4G and 3G spectrum in all the 22 circles
- Vodafone, which spent about Rs 20,000 crore to get spectrum in 1,800/2,100/2,500-MHz bands, will now have 4G airwaves in 17 circles
- Idea is paying Rs 12,798 crore for acquiring spectrum in 1,800/2,100/2,300/2,500-MHz bands. It will now be equipped to offer 4G services in 20 circles