Telcos can buy spectrum from Rs 71,000 cr in 5G auction: IIFL



The three private telecom operators – Reliance Jio, Bharti Airtel and Vodafone Idea – are expected to buy spectrum worth Rs 71,000 crore in the upcoming auction, leaving a large majority of the radio waves under the hammer, not sold, according to research company IIFL Securities.

The government will file next month over Rs 4.3 lakh crore value of airwaves capable of offering fifth-generation or 5G telecom services, including ultra-high-speed internet.

According to the report published on Wednesday, it will in principle nod to the government to allocate spectrum directly to companies will have a negative result of the mega-auction.

“While supply is plentiful, the government has not cut TRAI’s proposed reserve prices despite telcos’ claim that these were still high. We see telcos bid only for 4 out of 10 bands and spectrum should be sold at base price. We estimate spectrum expenses of Rs 37500 crore, Rs 25000 crore and Rs 8500 crore for Jio, Bharti and Vi, “said IIFL.

The research firm further said if all telecom operators use the option of equal annual terms over 20 years, the government would receive Rs 6,200 in revenue in the current fiscal year.

It said telco’s may miss the premium 700 MHz band spectrum as they wait for further spare price cuts. Jio and Bharti may strengthen their sub-1 GHz holdings by bidding for the 850 MHz and 900 MHz bands, respectively.

“We do not accept bids in the 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz bands. Bids for 3.6 GHz are somewhat difficult to predict,” it said.

The report further said that telcos can offer small amounts in the 3.6 GHz and 28 GHz bands – seen as the prime radio waves for 5G technology – because it can lead to huge savings in spectrum usage costs.

The Telecom department (DoT) has issued a new order that will enable telecom operators to reduce the cost of spectrum usage proportionately when buying fresh radio waves in the upcoming 5G auction.

(Only the headline and image of this report may have been re-edited by Business Standard staff; the rest of the content will be automatically generated from a syndicated feed.)

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