The restricted spectrum buy by telecom operators signal a greater focus on monetisation, according to brokerage firms.
The spectrum auction went along the expected lines, however, analysts were caught by surprise after Vodafone Idea’s spirited participation. In a report the following day, Jeffries noted, “VIL’s spectrum spend of ₹35bn/$0.4bn was above the upper end of our expectation. While VIL did not buy back its entire spectrum coming up for renewal, it did spend on adding spectrum mainly in the 900MHz band to enhance the experience for its 4G users. An increase in spectrum, post a hefty capital raise, suggests that the company is preparing for network rollouts. This should further moderate market share shifts towards Bharti Airtel and Reliance Jio.”
Jeffries also added that selective buying of the spectrum indicates a focus on network monetisation for all operators.
JP Morgan added that an uneventful auction has cleared the way for awaited tariff actions. “With the conclusion of the auctions (delayed from June 6) without any surprises, ability to take tariff actions should resume. We believe this is likely to have contributed to the sharp stock reactions yesterday. We have baked in tariff hikes of 25 per cent spread over 2Q/3QFY25,” the said.
For the most part, bidding in the auctions was for spectrum which was coming up for renewal. According to a summary by UBS, “Bharti had 41.8Mhz of spectrum expiring across 900Mhz and 1800Mhz bands. In addition to renewing this spectrum, the company also acquired an additional 11Mhz of 900Mhz band, 24.2Mhz of 1800Mhz band and 20Mhz of 2100Mhz band. According to the company, this was done in order to bolster the mid band and sub-Ghz holding to enhance coverage, especially indoors. VIL had 12.4Mhz of spectrum expiring across 900Mhz and 1800Mhz bands. The company renewed this and acquired an additional 17.6Mhz across 900Mhz, 1800Mhz and even 2500Mhz (for Bihar), again to enhance 4G coverage in select priority circles.”