Telcos split over timing of 4G spectrum auction; Mukesh Ambani's Jio pushes for earliest date

Telcos are split over when 4G spectrum auctions should be held. While Reliance Jio is pushing hard for the bidding to take place at the earliest, Bharti Airtel and Vodafone Idea (Vi) are in no hurry and would like the sale process to take place in...

Mumbai: Telcos are split over when 4G spectrum auctions should be held. While Reliance Jio is pushing hard for the bidding to take place at the earliest, Bharti Airtel and Vodafone Idea (Vi) are in no hurry and would like the sale process to take place in 2021. Jio, the only profit-making operator, whose parent Jio Platforms recently raised over Rs 1.52 lakh crore, has a large chunk of airwaves permits expiring in its key 800 MHz band in 2021. It also needs more spectrum to cater to its rapidly increasing subscriber base that is consuming more and more data.

Financially weaker Bharti Airtel and Vodafone Idea, faced with thousands of crores of adjusted gross revenue (AGR) dues, too have spectrum permits ending around the same time, but in lesser quantities and have backup airwaves available, say experts. SP Kochhar, director general for Cellular Operators Association of India (COAI), the industry body which represents all three telcos, told ET that its members have “different” views on the timing of the spectrum auctions.

“Some of them (telcos) feel that financial stability has to come first…another view is, we need spectrum immediately,” said Kochhar, without specifying further. According to government officials and industry executives, a substantial portion of Jio’s own airwaves, and those it shares with Reliance Communications in the 800 MHz spectrum band, expires in 12 and 14 circles, respectively, starting July 2021.


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Without these airwaves, Jio’s services in these circles will be severely hurt, making it imperative for the telco to buy them back at the earliest, say analysts. In comparison, Bharti Airtel and Vi will see less expensive airwaves expire—mostly in the 1800 MHz band—across eight circles, also from July 2021 onwards. But both have back-up airwaves in most of these service areas. The three telcos did not respond to ET's queries.

The telecom department is preparing to sell airwaves in the 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz bands as part of the 4G auctions. But given that the Cabinet note hasn’t been floated as yet—delayed mainly by the AGR crisis—the next auction may be held in December or even early next year, officials have previously told ET. As it is, Jio holds lesser quantity of 4G airwaves than its rivals. For instance, according to a Vi presentation, the telco holds 1,724 MHz of liberalised spectrum—airwaves for which market price has been paid— that can be used for deployment of any technology. Airtel holds 1,536 MHz of liberalised airwaves. In comparison, Jio has a total of 1,108 MHz of liberalised airwaves.

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Moreover, Jio has been adding subscribers at a rapid pace—increasing pressure on its network - compared with its rivals which have been losing users, said a Mumbai-based analyst, who did not wish to be named. For example, Jio added nearly 4.5 million mobile phone users in June 2020, taking its subscriber tally past 397 million, while Bharti Airtel and Vi lost 1.12 million and 4.82 million customers, respectively. Both Airtel and Vi said they ended the quarter with around 280 million users.

“When pressure on telcos increases, they face network issues as coverage area of towers goes down,” said Rajiv Sharma, head of research at SBI Caps. Nitin Soni, senior director, Corporate Ratings at Fitch Ratings added that Jio “may need to acquire additional spectrum assets” as it tries to achieve its subscriber base target of 500 million users.

Analysts said Jio is facing a similar situation that Bharti Airtel and erstwhile Vodafone India and Idea Cellular (now merged into Vodafone Idea) had found themselves in during the February 2014 and March 2015 auctions when they had to buy back their own expiring spectrum in the 900 MHz band in several circles. Back then, with more competition from financially better off players, both Airtel and Vi had to buy back their airwaves at exorbitant rates. This time around, Jio is unlikely to face similar competition as both its rivals are financially constrained. Vi and Airtel have to pay Rs 50,400 crore and Rs 25,976 crore more, respectively, as AGR dues over the next 10 years, till March 2031.
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