HSBC Global Research in a report on Monday said that it expects Bharti Airtel to invest Rs 9800 crores in the upcoming spectrum auction. The independent research firm with a “strong focus” on the emerging markets said that it doesn’t expect the wireless operators to purchase the entire spectrum set for renewal. HSBC also said that Airtel is set to witness an improvement in its average revenue per user (ARPU) in the upcoming years. The firm said that the migration of users from 2G to 4G along with a potential hike in the tariff in the next financial year will contribute to the ARPU increase.
HSBC Says Industry Likely to Skip 700 MHz Spectrum
HSBC estimates Reliance Jio and Vodafone Idea to invest Rs 12,500 crores and Rs 3300 crores respectively in the upcoming spectrum auctions scheduled for early March.
“We don’t expect operators to purchase the entire spectrum coming up for renewal as operators have enhanced their spectrum holdings over the last few years,” HSBC said in its report.
The firm said that Airtel and Reliance Jio could buy “incremental growth spectrum” in the sub-GHz bands along with the 1800 MHz and 2300 MHz bands. HSBC said that the move to buy the “incremental growth spectrum” would “reduce network capex forecasts.”
Crucially, HSBC believes the wireless operators are “unlikely” to bid for 700 MHz spectrum as the reserve price is “high” in India.
It has to be noted that Motilal Oswal in December said that Reliance Jio would require capital expenditure of Rs 28,000 crore to renew its expiring spectrum at reserve price. The firm engaged in the financial services also provided higher investment values for Airtel and Vodafone Idea as compared to HSBC. Motilal Oswal said that Airtel would require Rs 13,000 crore while Vodafone Idea would require Rs 8300 crore to renew the expiring spectrum.
HSBC Says Bharti Airtel ARPU to Rise at 14% Over Next Three Years
Meanwhile, HSBC in its report on Monday said that Airtel’s ARPU is set to increase at 14% compound annual growth rate (CAGR) over the next three years. The firm also said that the “acquisition of high value” users will aid the ARPU increase. It was also highlighted that Airtel subscriber addition “remained robust” at 3.7 million in October, 2020.
The second largest wireless operator in India is also said to have added 695,000 postpaid users in the second quarter of the current financial year. Airtel 4G subscriber penetration is said to have improved to 52% in the same period with HSBC expecting the 4G subscriber penetration to hit 80% by the 2023 financial year.