The telecom industry is expected to spend Rs 100,000 crore towards spectrum acquisition in upcoming auctions, which will translate into a payment of Rs 37,000 crore upfront.
The government is putting up for auction 2,300 MHz of spectrum, the largest bundle on offer so far.
Airtel, Vodafone and Idea combined will spend Rs 1.2 lakh crore over the next two years on network expansion and spectrum payouts, according to CRISIL Research.
Data is emerging as the new growth engine for the telecom industry and operators need spectrum to build capacity to deliver high-speed mobile broadband services.
Analysts expect telecom companies to bid selectively in the 700 MHz band, which is being auctioned for the first time, and at best 10 per cent of spectrum in this band may be sold.
Interest in the 2,300 MHz and 2,500 MHz bands may be limited because of indoor coverage issues.
With the department of telecommunications releasing 200 MHz of fresh spectrum in the 1,800 MHz band through harmonisation, operators are expected to bid for it because it is efficient for LTE services and the ecosystem is more evolved in this band.
Spectrum in the 1,800 MHz band is priced at a fourth of the price of the 700 MHz band. CRISIL Research expects 50-60 per cent of spectrum in the 1,800 MHz band to be sold.
"The harmonisation in the 1,800 MHz band will lead to the availability of 200 MHz of contiguous spectrum across India. Consequently, operators will look to plug 4G holes in leadership circles (defined as circles where they are one of the top two operators by revenue market share) through 1,800 MHz, wherever such spectrum is available," CRISIL Research said.
Idea and Vodafone will need to bid aggressively in the upcoming auctions.
Vodafone has spectrum to offer 4G services in circles that cover only only 33 per cent of its revenue market share.
Idea does not have 4G spectrum in key circles of Gujarat and Uttar Pradesh (West).
