According to a BofA Securities report, Reliance Jio and Bharti Airtel are in a position to buy pan-India 5G spectrum but uncertainty remains around Vodafone Idea Limited’s (Vi) bid for the radiowaves. The report also noted that it might be difficult for any telecom company which has not bid for 5G spectrum in a particular circle to roll out 5G on the existing 4G bands because the existing networks are running at a capacity, and hence there is limited free spectrum which could be carved out.
Moreover, as per BofA report, Vi management has focused on top core circles and the company may selectively bid in their core 3G and 4G circles. BofA report estimates that operators may be interested in 3.5 GHz in this auction as it is the primary band for 5G, while the premium 700 MHz may garner limited interest given its high pricing and as its propagation characteristics are similar to that of 800 and 900 MHz band.
The Department of Telecommunications (DoT) is likely to move the 5G spectrum auction proposal to the Union Cabinet for final approval. The Telecom Regulatory Authority of India (TRAI) has recommended a mega auction plan of over Rs 7.5 trillion for over 100,000 megahertz spectrum in case the government allocates it for a period of 30 years.
Besides, according to back-of-the-envelop calculations, in case of 20 years, the total value of the proposed spectrum auction will stand at around Rs 5.07 trillion at the reserve price. BofA Securities also expects Jio to be aggressive in looking to deploy 5G, especially standalone 5G, which would force other telcom players also to front load capex investments.
BofA Securities asserts that the government is likely to consider allocating or auctioning E and V bands for backhaul which would help reduce the dependence on fibre backhaul connectivity, especially in tier II and tier III cities.
