The three private telecom operators – Reliance Jio, Bharti Airtel and Vodafone Idea – are set to buy spectrum worth Rs. 71,000 crores at the upcoming 5G auction, leaving a vast majority of radio waves under the hammer unsold , according to research firm IIFL Securities.
The government will auction next month around Rs. 4.3 lakh crore of airwaves capable of delivering fifth-generation or 5G telecommunications services, including ultra-high-speed internet.
According to the report released on Wednesday, the government’s sign of principle to allocate spectrum directly to companies is going to have a negative outcome on the mega auction.
“Although supply is plentiful, the government has not reduced the reserve prices offered by TRAI despite telcos’ assertion that these were still high. We see telcos only bidding for four of the 10 bands and the spectrum is expected to be sold at base price Rs. 37,500 crore, Rs. 25,000 crore and Rs. 8,500 crore for Jio, Bharti and Vi,” IIFL said.
The research firm further stated that if all telecom operators take advantage of the option of equal annual installments over 20 years, the government would receive Rs. 6,200 revenue in the current financial year.
He said telecom operators could miss out on spectrum in the 700 MHz premium band pending further reductions in the reserve price. Jio and Bharti could bolster their sub-1 GHz holdings by bidding for the 850 MHz and 900 MHz bands, respectively.
“We don’t assume any bids in the 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz bands. Bids for 3.6 GHz are somewhat difficult to predict,” he said.
The report further states that telecom operators could bid for small amounts in the 3.6 GHz and 28 GHz bands – considered the primary radio waves for 5G technology – as this can result in significant savings on service charges. use of the spectrum.
The Department of Telecommunications (DoT) has issued a new order that will allow telecom operators to proportionally reduce spectrum usage fees when purchasing new radio waves at the upcoming 5G auction.