Vodafone, Airtel & Idea have enough 4G airwaves to counter Jio but the spectrum cost remains unrealistically high

Top three telcos - Bharti Airtel, Vodafone and Idea - have secured adequate 4G spectrum in recently concluded auction to counter Jio, making them more focused to poach subscribers, analysts said today.

The spectrum auction, which was touted as the biggest sale of mobile airwaves, finished in a whine yesterday, with just Rs 65,789 crore of bids coming in more than five days as against an expectation of Rs 5.6 lakh crore.

Almost 60 percent of airwaves, including premium 4G bands, stayed unsold.

Idea acquired 349.20 MHz of spectrum for Rs 12,798 crore in 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz bands and will be able to offer 4G services on its own spectrum across 20 circles, including nine new service areas of Uttar Pradesh (West), UP (East), Gujarat and Mumbai.

Vodafone India, which has emerged as the most aggressive bidder, has acquired spectrum in 1800 MHz, 2100 MHz and 2500 MHz bands for a total cost of Rs 20,280 crore. It has 17 circles with 4G capability.

"We now believe that the top three telcos have adequate 4G spectrum to counter Jio, making it more competitive to poach subscribers. We now also see faster consolidation among smaller telcos, given lack of data spectrum," Bank of America Merrill Lynch said in a report.

It included that the top three operators, be that as it may, do not have a sub-1 GHz 4G band that Jio has and in this way, there is a probability that these organizations may purchase spectrum of 700 MHz in the future.

"With 60 per cent of the spectrum unsold, we expect the government to reduce prices of 700/900 MHz in future auctions to entice demand," it added.

The industry has said financial strain on the industry and unrealistically high reserve price was the reason behind the 700 MHz band not getting any bidder.

Soak valuing of 700 MHz band kept operators far from bidding for the effective frequency band that single-handedly could bring over Rs 4 lakh crore at the base price to the government.

"Telcos bought more spectrum than what we had anticipated, and at 50-60 MHz of average spectrum holding per circle, we do not expect Bharti and Jio to need additional spectrum in the near-to-medium term," said Goldman Sachs.

It included that while Vodafone and Idea purchased 2500 MHz spectrum in the auction, neither of them has stopped all their 3G/4G holes and rather merged property in numerous current circles.