Bharti Airtel EMD Higher Than Expected, Telco May Buy More 2300 MHz Spectrum: ICICI Securities

As we reported a few hours ago, the DoT has disclosed the earnest money deposit (EMD) placed by each telecom operator for the spectrum auction 2021. For those who are unaware, EMD helps in understanding the maximum spectrum payout of a telecom operator. In general, the pre-qualified operators can buy spectrum worth 5-7x of EMD. ICICI Securities, in its report, said that the EMD of Bharti Airtel is higher than expected because the telecom operator has very less requirement of the spectrum when compared to Reliance Jio. Airtel has put EMD of Rs 3,000 crore, which means the maximum spectrum payout for Bharti is capped at Rs 150 crore to Rs 210 crore. Earlier, ICICI Securities predicted that Airtel might put an EMD of Rs 2,000 crore, but it has exceeded the limitations.

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Bharti Airtel May Buy More 2300 MHz Spectrum

Telecom operators are required to deposit EMD which will enable them to bid for spectrum quantity in the upcoming auction. EMD also helps to understand operator spectrum requirement and likely maximum payout. This is also because of adequate spectrum supply which will ensure final spectrum prices will be equal to reserve prices. Therefore, spectrum demand multiplied by reserve price equals the final spectrum payout.

ICICI Securities further predicts that Airtel may buy more of 2300 MHz spectrum. However, the telco is unlikely to fill the sub-GHz gap in this auction. Vodafone Idea has placed EMD of Rs 475 crore which means it can buy spectrum worth Rs 3,300 crore.