Spectrum auction: Reliance Jio, Bharti Airtel to beef up 4G portfolio

Reliance Jio and Bharti Airtel, who are seen to be the major buyers of spectrum in the upcoming auctions will, apart from going for the 5G band of 3,300-3,670 Mhz and 24.25-28.5 Ghz, also beef up their existing portfolio in the 4G bands.

This is because by increasing the quantum of 4G spectrum, the same can be optimised and used for providing 5G services also. As a result, expect competition between Jio, Bharti Airtel, and even Vodafone Idea in some cases for spectrum in the 800, 900, 1,800 and 2,300 Mhz band, where each of them would try to consolidate their positions.

Since the scope of buying spectrum in 5G bands is similar for all the three operators because there’s enough for all the three, in overall balance, Jio will have an advantage because of its better 4G portfolio.

The competitive edge swings in favour of Jio because it has a huge opportunity of increasing its spectrum bank in the 800 Mhz band as the quantum of spectrum in this band being put up for auctions, which begins from July 26, has increased from 81.25 MHz to 136.25 Mhz. Analysts expect that Jio will acquire 110 Mhz, which is 80.7% of the total spectrum on sale in this band for a total spend of around Rs 18,750 crore.

The field for Jio here is clear because Bharti Airtel and Vodafone Idea will most likely not bid as they never had a presence in this band and instead had consolidated their positions in the 900 Mhz band.

Both 800 Mhz and 900 Mhz spectrum bands are low frequency bands where the propagation characteristics are higher and therefore, with lesser number of towers, larger areas and consumers can be serviced.

On their part, Bharti and Vodafone Idea would focus on the 900 Mhz band but they would not be having the advantage Jio would have in 800 Mhz. This is because the total quantum of spectrum in this band on sale has decreased from 99.2 MHz to 74.4 Mhz. Since, Bharti has the advantage of better financials, it would certainly have an edge over Vodafone Idea here. It is likely that Bharti may spend around Rs 3,615 crore at reserve price on acquiring airwaves in this band and Vodafone Idea may look at spending around Rs 913 crore.

The 4G band where all the three operators may be in competition would be 1,800 Mhz. Here, the quantum of spectrum on sale has increased marginally from 262.8 MHz to 267.2 MHz and the bidding strategy of all the three are likely to be the same. Based on the reserve price, Bharti is expected to spend around Rs 9,093 crore, Jio Rs 1,1494 crore, and Vodafone Idea around Rs 1,592 crore.

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