Reliance Jio, the largest wireless operator in India is required to spend Rs 28,000 crore in the upcoming spectrum auction expected to be held in March, Motilal Oswal said on Wednesday. The firm engaged in the financial services in a report said that the upcoming spectrum auction “would cater largely to the renewal of expiring spectrum coming up” in the next financial year. The Union Cabinet on Wednesday approved the Department of Telecommunications (DoT) proposal to conduct an auction for spectrum across multiple bands including 700 MHz, 800 MHz, 900 MHz, 1800 MHz and 2100 Mhz.
Reliance Jio Required to Spend The Most in Spectrum Auctions
Further, the spectrum in 2300 MHz and 2500 MHz bands will also be up in the auction with the government highlighting that a total of 2251.25 MHz will be under the hammer. In a release, the government also highlighted that the 2251.25 MHz of spectrum is valued at Rs 3.92 lakh crore at a base reserve price.
“The auction would cater largely to the renewal of expiring spectrum coming up in FY22, along with fresh spectrum in the remaining bands,” Motilal Oswal said in its report.
The firm highlighted that Reliance Jio would require capital expenditure of Rs 28,000 crore to renew its expiring spectrum at reserve price while Bharti Airtel would require Rs 13,000 crore. Further, Vodafone Idea is said to require the least capital expenditure of Rs 8300 crore to renew its expiring spectrum.
Motilal Oswal in a report in October said that Reliance Jio has 115 MHz of spectrum in the 800 MHz band up for expiry in the upcoming year. The 800 MHz band spectrum is said to have been acquired/shared by Reliance Jio from Reliance Communications across 19 circles. Similarly, Airtel is said to have 57 MHz of spectrum in the 1800 MHz band up for renewal in the upcoming year. Vodafone Idea, the third largest operator is said to have 37.8 MHz and 6.2 MHz of spectrum up for renewal in the 1800 MHz band and 900 MHz band respectively.
700 MHz Band Carries “Whopping” Price Tag
Motilal Oswal highlighted that the value of 700 MHz spectrum alone stood at a “whopping” Rs 2.3 lakh crore, as per the base price set by the Telecom Regulatory Authority of India (Trai).
“The steep pricing of the 700MHz spectrum has been maintained, leaving limited interest among telcos to buy this spectrum at such an exorbitant price,” Motilal Oswal said in its report.
The firm also highlighted that the remaining spectrum is valued at Rs 1.6 lakh crore and that the telecom operators “would need to furnish additional capex to buy fresh spectrum.”