Vodafone Idea Will Not Invest in 5G Spectrum Auction Much
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The Indian telecom industry has only two players with free cash flows and profits – Reliance Jio and Bharti Airtel. The third private telco which is Vodafone Idea (Vi), has not made a single rupee since the merger happened. In the upcoming spectrum auction, it is unlikely that VIL (Vodafone Idea Limited) will invest heavily. All the analysts have discounted the chances of Vi participating in the 5G spectrum auction in the same capacity as Bharti Airtel and Reliance Jio.
Telcos Have Plenty of Airwaves to Choose From, No Bidding War Expected
According to a note seen by ET Telecom, JP Morgan said that there will be no bidding war given that there is 330 MHz of airwaves in the 3300 MHz band available in each circle, while an operator only needs 100 MHz for the PAN-India rollout of 5G services. Thus, there is more than required airwaves available.
Kotak said that the situation is a little concerning because the enterprises have been permitted to obtain airwaves directly from the government for building private 5G networks. The telcos were looking for enterprise revenues from 5G rather than placing their bets on the retail consumers.
Motilal Oswal said since the government is looking to hold spectrum auctions annually, there are fewer chances that the telcos will bid heavily for airwaves in the upcoming auction, which has spectrum set at a quite high reserve price.
If the majority of the airwaves go unsold in the upcoming auction, the telcos can always get more next year. The government will have no choice but to cut the reserve price next year if the telcos bid in a mild manner.
Vodafone Idea (Vi) is trying to raise money, but it won’t be possible for the telco to do so before the government takes its equity stake in the company. Ravinder Takkar, CEO of Vi, had earlier said that they are close to raising Rs 20,000 crore.
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