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Monday July 22, 2024

India offers $11.53bn spectrum auction, analysts predict lacklustre bidding

By News Desk
June 26, 2024
Packs of freshly printed $20 notes are processed for bundling and packaging at the US Treasurys Bureau of Engraving and Printing in Washington DC. — AFP/File
Packs of freshly printed $20 notes are processed for bundling and packaging at the US Treasury's Bureau of Engraving and Printing in Washington DC. — AFP/File

BENGALURU: India has offered telecom spectrum worth around INR962.38 billion ($11.53 billion) for auction on Tuesday, it said in a release, even as analysts expect lacklustre participation from players as they shore up their existing spectrum.

A total of 10 GHz of radiowaves is up for sale in this auction, ranging between 800 MHz to 26 GHz.

WHY IT’S IMPORTANT

The Indian government derives a big chunk of its revenue from spectrum auctions, which award telecom companies rights over airwaves for a particular period.

During the previous auction in August 2022, telecom players Vodafone Idea (VI) (VODA.NS), opens new tab, Bharti Airtel (BRTI.NS), opens new tab and Reliance Industries' (RELI.NS), opens new tab Jio Infocomm together picked up 5G spectrum worth $19 billion to boost capacities in the world’s second-largest smartphone market.

The amount of spectrum up for auction this time around is lower than the previous year’s, as telecom firms have already acquired enough to meet most of their bandwidth requirements in the previous auction, also a likely indication that they would not be bidding for bigger blocks.

KEY CONTEXT

“Bidding unlikely to be a spirited exercise... we do not expect any player to bid aggressively at the auction,” analysts at Antique Stock Broking said in a note.

Antique expects Bharti to bid for some of its expiring spectrum -- airwaves where its license is expiring -- worth INR38.2 billion, while Jio, which has no spectrum pending for renewal, is likely to be selective.

Debt-ridden VI may only bid for spectrum that is expiring or to fill in gaps, the note added.The auction was delayed twice until a new government was elected, local newspaper The New Indian Express reported earlier this month, citing, opens new tab unnamed officials.

MARKET REACTION

Shares of the two listed telecom firms erased early gains on the day, with VI down 0.17 per cent and Bharti Airtel down 0.3 per cent.