August8 , 2022

jio: Airtel revs up 5G battle on day 4 to protect its turf in UP (east) from Jio

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The government added another ₹232 crore to its kitty from India‘s first 5G spectrum auction on Friday, taking its total proceeds to ₹149,855 crore at the end of day four, driven entirely by the fight for the 1800 MHz in UP (East) which ensured that the action will now move into day five.

The fourth day of the sale saw seven more rounds of bidding, with the per unit price of the 1800 MHz band increasing by 49% over its base price, to ₹135.6 crore for UP (East). The price jumped, said industry trackers, as

fought with larger rival Jio to protect its market share in India’s most populous circle with some of its airwaves expiring in 2024.

Analysts estimate the outflow for the 1800 MHz band pan India has surged almost five times to ₹10,057 crore from the base price of ₹2,116 crore.

At the end of Friday’s bidding, analysts estimated the spends for Jio to be over ₹84,000 crore, while Airtel’s is expected to be over ₹46,000 crore and that of Vi to be around ₹18,500 crore. Day five will start from round 24, with some industry watchers expecting the sale to go onto Monday.

Bharti

has 5 MHz of liberalised spectrum, or airwaves bought in an auction, in the efficient 900 MHz band and another 6.2 MHz of un-liberalised 900 MHz spectrum in UP (East), which is expiring in February 2024, said an industry executive. Un-liberalised spectrum refers to those allotted administratively, or without auctions.

“Bharti will be in a spot, post-Feb 2024, as it will be left with just 5 MHz of liberalised 900 MHz spectrum, which won’t be enough to compete with Jio, especially if the latter has got 10 MHz of 700 band in UP (East) as well,” the executive said.

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Hence, Airtel is engaging in a bidding war with Reliance Jio to prevent a business crisis by targeting an extra 5 MHz in the 1800 MHz band to defend market share in this key circle. More so since there is no 900 MHz spectrum on offer in this circle in this auction.

Currently, Airtel has 15 MHz of liberalised spectrum in 1800 MHz band in UP (East), while Vi and Jio have less – 10 MHz each in this band. “The demand for spectrum in the UP-E service area of the 1800MHz band was for 15 MHz compared to 10.8 MHz on offer,” thus driving up the price, Credit Suisse said in a note.

The brokerage said the circle is the fourth largest service area in terms of adjusted gross revenue (AGR) and accounts for 6.6% of AGR revenue. “For individual operators as well, the area accounts for a reasonably large share of their gross revenues – ranging from 6.5% for Vi to 8.4% for Airtel and 7.6% for Jio.”

Of the circle’s 101.54 million subscribers in UP (E), Airtel has the highest share with 37.46 million users, followed by Jio with 32.92 million users, Vi with 20.23 million, and BSNL with 10.91 million. However, Jio has the highest revenue market share (RMS) of 48.2%, with Airtel a close second at 39.9% and Vi lagging far behind at 9.4%.

Telcos had bid for airwaves worth ₹149,623 crore at the end of day three. The previous record of government collection from spectrum auctions was ₹1.09 lakh crore in 2015.

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