Begin typing your search...
Time now to justify high spends on telecom spectrum: Experts
A day after the conclusion of the latest round of telecom spectrum auctions, top merchant bankers and research firms said Reliance Jio and Bharti Airtel are best placed today in terms of airwaves holdings and that the focus must now shift to grow the industry pie.
By
migrator
migrator
Mumbai
They also said the low appetite for airwaves in the latest round – that saw takers for just 11.6 of the spectrum on the block – was a result of “rational behaviour” of operators. “We note that the cumulative bids in auctions since 2010 now total $3.5 trillion. For an industry with annual revenue in the vicinity of $1.8 trillion and pre-tax earnings of around $500 billion, these are not small numbers, in our view,” a report of Kotak Institutional Securities said.
“Everything has a context to it and the most critical context, now that the top four operators are hopefully mostly done building their spectrum footprint, is whether the industry pie can become large enough to justify the massive spectrum investments,” it said.
“The industry has placed its bets largely on one variable – data volumes. And a disappointment of that front could mean a long phase of sub-par industry economics,” it said, referring to the state of play for Airtel, Jio, Vodafone and Idea. The latest spectrum auction was touted as the largest given the quantum of airwaves on the block, but ended after 31 rounds over five days with a total commitment of only Rs 65,789 crore ($9.8 billion), or about 11.6 per cent of the expected Rs 5.66 lakh crore). Stating that the net bid of $9.8 billion was 47 per cent more than its expectation, Goldman Sachs maintained that two players – Airtel and Reliance Jio – just bought more spectrum than what was anticipated, and will require no additional airwaves in the near-to-medium term.
As regards the other players, it said Idea’s spectrum holding was still pretty much inferior to that of Airtel and Jio, while in the case of Vodafone, five circles will remain without any 4G presence, despite considerable improvement in holdings. “With spectrum auctions done, one risk to the industry is behind us. Companies have spent Rs 658 billion – 65 per cent more than what we estimated, thus increasing leverage. Rising competitive intensity is the key risk and drives our cautious view on the operators,” said Morgan Stanley.
Vodafone India buys spectrum for Rs 20,280 cr in latest auction
Vodafone India has acquired spectrum in all its key telecom circles at a cost of Rs 20,280 crore in the latest spectrum auction, the company announced on Friday. India’s telecom spectrum auction closed within five days on Thursday with a total commitment of barely Rs 65,789 crore ($9.8 billion) -- about 11.6 per cent of the targeted Rs 5.66 lakh crore ($88.5 billion). “Vodafone India successfully acquired a total of 2x82.6 MHz FDD (Frequency Division Duplex) and 200 MHz TDD (Time Division Duplex) spectrum in the auction, providing high-capacity, multi-band 4G capability operating across the 1,800, 2,100 and 2,500 MHz bands,” the company said in a statement here. “This enables us to provide our customers broadband services across India with multi-band high capacity capability in our strong circles,” said Sunil Sood, Managing Director and CEO of Vodafone India. Vodafone India has 17 circles with 4G capability, covering 90 per cent of the company’s total revenues and 94 per cent of mobile data revenues.
Visit news.dtnext.in to explore our interactive epaper!
Download the DT Next app for more exciting features!
Click here for iOS
Click here for Android
Next Story
