The Notice Inviting Applications (NIA) for the upcoming spectrum auction has a few incremental positives for telcos, including duration of right-to-use spectrum unchanged at 20 years (versus 30 years announced earlier), which restricts total spectrum payouts, and an easier payment option with the introduction of 20 equal annual instalments, said analysts’ reports from various brokerage houses on Thursday.

They also said while Bharti Airtel (Airtel) and Reliance Jio (Jio) are well-positioned to participate, they are doubtful of Vodafone-Idea (VIL)‘s active participation in the upcoming auctions.

Spectrum prices for key 3300MHz and 28GHz are same as Telecom Regulatory Authority of India (TRAI) recommendation at ₹317 crore/MHz and ₹7 crore/MHz pan-India, respectively. The Cabinet, on Tuesday, approved the auction of spectrum across bands and released NIA on Wednesday. The auction will kickstart from July 26.

“This implies telcos will spend ₹31,700 crore for 100MHz pan-India on 3,300MHz band and ₹3,500 crore for 500MHz on 26GHz band. This is broadly in line with our estimates for Bharti Airtel and Reliance Jio (Rjio),” said ICICI Securities in its report.

Credit Suisse said while the government is yet to come up with the modalities and pricing of direct spectrum allotment to enterprises for captive networks, this could be negative for telcos’ future 5G monetisation from enterprises, even as its use cases are still being developed. Indeed, all three telcos had publicly expressed strong views against direct spectrum allotment for captive private 5G networks, it said.

Given the operator’s public statements, nascent 5G device penetration and limited use cases, it expects a more gradual 5G roll out by telcos over the next 2-3 years.

“Overall, Airtel and Jio are well-positioned to participate in the upcoming 5G auctions, while VIL’s ability to effectively compete in 5G auctions is constrained due to its weak balance sheet. We remain constructive on Airtel, as it remains a key beneficiary of the average revenue per user (ARPU) improvement, improved regulatory environment and organic market share gains,” said the Credit Suisse report.

JP Morgan also said it does not expect a bidding war because 330Mhz of the mid-band spectrum of 3,300MHz is available in every circle, and an operator requires only 100Mhz for pan India roll out. “This means more than adequate spectrum is available for the three operators and hence we don’t expect a bidding war in the auction,” it said.

Similarly, Motilal Oswal said now with merely three players in the market — with only two of them looking for serious investments and government’s plan to offer spectrum through an annual schedule — there seems limited need to invest at a high price.

“Yet, our past experience underscores the risk of telcos engaging in heavy investments to match the competition. This could be a key overhang on stocks. VIL particularly could participate to some extent given the lower initial investment,” it noted.

According to Nomura, despite the Cabinet approval for no upfront payment and scrapping of financial bank guarantees, it believes VIL could restrict its bid for 5G spectrum to select circles, given its capex constraints, much delayed fund-raising and existing gaps in 4G coverage.

“We note 4G rollouts and the Jio launch had led to the Indian telecom industry consolidating from 12+ operators to a 3+1 market structure. Now, with the upcoming 5G rollouts, we think Airtel and Jio’s market share gains could likely accelerate further at VIL’s expense and Indian telecom market could end up as a virtual duopoly. Airtel remains our preferred pick among listed Indian telcos,” said Nomura in its report.