June spectrum auction: Jio likely to spend Rs 12,000 cr, Airtel Rs 8,000 cr

Reliance Jio is expected to allocate up to Rs 12,000 crore for spectrum acquisition in the upcoming auction, while Bharti Airtel’s projected expenditure is anticipated to be less than Rs 8,000 crore, according to a report in the Financial Express.

Vodafone Idea, on the other hand, is predicted to invest around Rs 1,000 crore. The spectrum auctions are slated to commence on June 6.

Jio to lead auction this year

Jio is expected to take the lead in the auction once again, with plans to bolster its spectrum portfolio, particularly in the 800 MHz band across certain circles. Analysts suggest the company may also expand its holdings in the 3300 MHz band to 130 MHz across all circles, the report said.

The amount that Jio is anticipated to spend stands at four times its earnest money deposit (EMD) of Rs 3,000 crore. Previous auctions show that the company has typically spent between two to six times its EMD.

Analysts had initially anticipated limited participation from Jio before telecom companies made their EMD deposits. This expectation was based on the fact that the company had no spectrum up for renewal and had already procured a substantial portion of 5G spectrum in the previous auction, the report stated.

A total of 10,523.15 MHz of spectrum, spanning various bands including 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz, 3300 MHz, and 26 GHz, with a cumulative value of Rs 96,317.65 crore, will be available for acquisition.

Bharti Airtel and Vodafone Idea submit EMDs

The report stated that Bharti Airtel and Vodafone Idea, both vying to renew their spectrum holdings, have submitted EMDs of Rs 1,050 crore and Rs 300 crore, respectively.

Bharti Airtel faces the renewal of 42 MHz of spectrum across the 1800 MHz and 900 MHz bands in six circles. Based on reserve prices, this renewal would necessitate an expenditure of Rs 3,800 crore.

Investment banking and capital markets firms Jefferies stated, “Although Bharti has de-risked its operations by acquiring spectrum in 900/1800MHz bands in previous auctions, we still expect it to renew the bulk of its spectrum in these markets to protect/increase its market share. It may also bid in certain circles to increase its holding in 800MHz/1800MHz bands to 10-15 MHz.”

Earlier, Jefferies had forecasted that Airtel might emerge as the frontrunner in the spectrum auction, potentially allocating up to Rs 12,300 crore. The company is likely to allocate a maximum of Rs 7,900 crore, consistent with its past expenditure patterns in which it typically spent between four to eight times the amount of the EMD, the report said.

Vodafone Idea, despite having renewal requirements for 12 MHz of spectrum in the 1800 MHz and 900 MHz bands across two circles, might opt out of renewing its spectrum in the 1800 MHz band due to its substantial existing spectrum holdings. In this auction, it is expected that the company's expenditure will range from one to three times its EMD, as compared to the higher expenditure ratios of four to nine times observed in previous auctions, the report said.