- 02 Aug 2022
- ICICIdirect Research
Auction concludes, government nets Rs 1.5 lakh crore
News: Spectrum auction concluded with total bids worth Rs 1.5 lakh crore. Jio/Airtel/Vodafone Idea/Adani outlays stood at Rs 88078/43084/18799/212 crore, respectively. Assuming, operators opting for 20 year payout, the annual equated instalment will be Rs 7877/3853/1681 crore, respectively for Jio/Airtel/VIL.
Views: As expected, the core spectrum for 5G, 3300 MHz and 26 GHz (millimetre band) attracted strong bids. The key differential was pan-India 10 Mhz bid for 700 MHz spectrum band (by Jio) to fortify their indoor coverage strength much above peers and possibly expand Fixed wireless access for home broadband services, albeit at an incremental outlay of Rs 39270 crore. Given the huge quantum of spectrum purchased, the overall weighted spectrum usage charges (SUC) are likely to go down (as new spectrum has zero SUC) for Jio/Airtel by Rs 2200 crore/Rs 2000 crore on an annual basis. Furthermore, we expect, we expect 15-20% tariff hike by telcos just ahead of 5G services launch to make them cash flow neutral as most of the incremental 5G benefits of industry use cases is still 2-3 years.