The reserve price recommended by the TRAI (Telecom Regulatory Authority of India) is still not what the industry people wanted. Regardless, the Cabinet is likely to go ahead with the pricing recommendations from the regulator. This puts Bharti Airtel and Reliance Jio only as the companies which are expected to participate heavily in this auction. Vodafone Idea (Vi) doesn’t have a strong balance sheet at the moment, and the telco has been trying to raise funds for a long-time through external investors.
No New Telcos to Bid for Spectrum in India
It is unlikely that any new telecom operator would emerge out of the dust and bid for spectrum with such high reserve prices. Only companies with strong balance sheets, such as Airtel and Jio, are going to do that.
Further, according to BofA Securities, Airtel and Jio would go for PAN-India 5G spectrum, while VIL’s (Vodafone Idea Limited) strategy is unclear. VIL could go ahead with purchasing spectrum for its priority circles.
As per BofA, if VIL doesn’t have PAN-India 5G spectrum, its business would become vulnerable. Initially, the telcos might be more interested in going for the spectrum in the mid-bands rather than the mmWave bands.
Mid-band spectrum would enable the telcos to roll out commercial services faster and bring to life all the use-cases tested on their networks.
The spectrum auction is slated for June-July 2022 period. It would take the telcos around a month or two post the auctions are finished to roll out 5G services. The speed at which the Department of Telecommunications (DoT) allots the spectrum to the telcos would also matter a lot when we
talk about the pace at which the 5G rollouts would happen in India.
Jio currently has the best free cash flow amongst all the telcos in India, and the company might be looking to invest big in the spectrum auction of 2022.