Telcos Focused on 1800 MHz Band During 5G Spectrum Auctions, Here’s Why

The total debt of the industry would go up further to around Rs 6 lakh crore after this 5G spectrum auction. But this won't be a worrying sign for Airtel or Jio. It would be, however, an interesting period to focus on Vi (Vodafone Idea) and its strategies to bring as much money home as possible. 

Highlights

  • This particular spectrum auction was one of the biggest ever for India and its future.
  • During the spectrum auctions, telcos bid for 1800 MHz band airwaves.
  • The 1800 MHz band also mostly got sold for reserve price only, and there was a bidding war for the particular spectrum band in only one circle.

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This particular spectrum auction was one of the biggest ever for India and its future. The amount of money spent by the telcos is the highest ever spent on spectrum auctions. This was because the telcos wanted to shift to 5G as well as the presence of relaxed payment terms. One thing that's great for the telcos is that there is no SUC on the new spectrum, and the floor rate of 3% has also been removed. Jio and Airtel would be able to save around Rs 2,200 crore and Rs 2,000 crore because of this, said ICICI Securities. Along with this, the telcos have got an option to pay the entire due amount in 20 years in equal instalments at the interest rate of 7.2%. What's worth noting here is that the validity of the spectrum before it expires is also 20 years.

During the spectrum auctions, telcos bid for 1800 MHz band airwaves. This is mostly because they want to deliver better 4G services in different parts of India. The 1800 MHz band also mostly got sold for reserve price only, and there was a bidding war for the particular spectrum band in only one circle.

"While the 3300 MHz band will be crucial for 5G technology deployment going forward, the appetite for the 1800 MHz band stems from the
rising mobile broadband usage and thus the need for improving network capacity. Further, apart from one circle in the 1800 MHz band, the spectrum was sold on reserve price only," said Ankit Jain, Vice President and Sector Head, ICRA.

Debt Level of the Indian Telecom Industry to Go Up

Jain further said that the total debt of the industry would go up further to around Rs 6 lakh crore after this 5G spectrum auction. But this won't be a worrying sign for Airtel or Jio. It would be, however, an interesting period to focus on Vi (Vodafone Idea) and its strategies to bring as much money home as possible.

"Post the auctions, the debt levels of the industry would increase further to around Rs. 6 lakh crore as on March 31, 2023, with the addition of the spectrum liabilities. Further, the annual payments towards spectrum liabilities will be around Rs. 13,400 crore for FY2023, followed by Rs 19,600 crore for FY2024 and FY2025 each, before increasing to Rs. 65,500 crore from FY2026 onwards."

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