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

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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.

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.

Furthermore, ICICI Securities says that the sub-GHz spectrum gap in eight circles, of which spectrum availability in 900 MHz, is only in Tamil Nadu and Madhya Pradesh. The telco will likely purchase 5 MHz spectrum in each of these two circles, but the remaining gap in six circles can be filled in future auctions. The country' second-largest telco might also buy 1800 MHz spectrum to complete at least five carriers in each circle, including spectrum in 900 MHz and 2100 MHz band. "This will help Bharti in a smooth transition to 5G in future using dynamic spectrum sharing," said ICICI Securities in the latest report.

On the flip side, Vodafone Idea will have to renew 5 MHz spectrum in expiring 900 MHz band in Tamil Nadu. Besides, it will also need 5 MHz spectrum in 1800 MHz band each in Andhra Pradesh and UP East circles.

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Chakri is a go-to guy for your next smartphone recommendation. Back in his engineering days, he used to play with smartphones by installing custom ROMs and that passion got him into the tech industry. He still goes nuts about a smartphone knocking his door for review. Currently managing everything at Telecom Talk, Chakri is trying to master PUBG Mobile in his free time.

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