The next round of 4G spectrum auction in India is slated to take place on March 1, 2021. Many believe that the upcoming auction will primarily be focused on operators renewing their expiring spectrums in CY21. But according to a report from ICICI Securities, instead of focusing on the renewal of spectrum, the operators will use this auction to add more spectrum to their portfolio for an easier and faster rollout of 5G services. Thus, operators such as Bharti Airtel and Vodafone Idea (Vi) are expected to buy more airwaves in the 1,800 MHz and 2,300 MHz bands which are gaining traction in sub-GHz bands for 5G rollout. In addition to this, these bands will enhance the operators’ capability for providing better 4G services.
Airwaves in Spectrum Bands Bharti Airtel and Vodafone are Expected to Buy
Bharti Airtel is expected to buy more in the 1,800 MHz and 2,300 MHz bands for advancing its game in the 5G rollout. Airtel has 57 MHz spectrum in 1,800 MHz band (8 circles of India) and 6.2 MHz in 900 MHz (1 circle) band that will expire soon. Since these expiring spectrums are traditionally 2G, it will not be in the operator's best interests in renewing it as the industry has moved on to the 4G and very soon will shift to 5G.
Thus the upcoming auctions will cater more as a stepping stone for the telcos to build their 5G spectrum portfolio and strengthening 4G capacity. Airtel and Vi have a lot of spectrum in the 1800 MHz bands which will be up for renewal soon. Since both the companies already have excess spectrum in this band, they will buy more only after looking at the number of carriers they have in the expiring circles.
Airtel might aim to get five carriers in each circle with a cumulative holding of 900, 1,800, and 1,200 MHz bands. Thus the telco might put one carrier up for 2G services and use the rest for 4G. Vi already has more than five carriers in multiple circles; thus, it would avoid purchasing or renewing a lot of airwaves in 1800 MHz bands.
Bharti would be particularly looking to buy spectrum in the 2,300 MHz band. The telco might increase its spectrum holding in this band to 30 MHz in each circle and might even try to take it up to 40 MHz in select circles.
Both Airtel and Vi is expected to be renewing airwaves in the 900 MHz spectrum as it is a critical sub-GHz band for the telcos. Airtel might pass on the 800 MHz band since the telco doesn’t have much use for it. Further, there are fewer chances for the operators to jump in for buying in the 700 MHz sub-GHz band since its reserve price is quite steep.
Expected 4G Spectrum Auction Results
Taking a cue from the above information, it is likely that Airtel might purchase 5 MHz of spectrum in the 900 MHz band for one circle followed by 31.2 MHz spectrum in the 1,800 MHz band from the airwaves which are due to expire soon for eight circles. Further, the telco might buy 27 MHz growth spectrum in the 1,800 MHz band for seven circles with 90 MHz spectrum in the 2,300 MHz band for nine circles. It would amount to telco shelling out a total of Rs 121 billion in the auction out of which it will have to make an upfront payment of Rs 57 billion.
On the other hand, Vi might buy 5 MHz spectrum in the 900 MHz band for one circle and 10 MHz spectrum in the 1,800 MHz band for two circles from the expiring lot. It would mean that the telco will have to pay a total of Rs 33 billion out of which Rs 14 billion will be paid upfront.
Thus, after the auction ends Airtel is expected to end up with five carriers cumulative of 900, 1,800, and 2,300 MHz bands in a lot of key circles except in West Bengal and Kolkata. The telco might end up having 30 MHz of spectrum pan-India in 2,300 MHz band after the auction. As for Vi, the telco already has a strong spectrum portfolio all thanks to the combined resources of Vodafone and Idea.