Jio has spent the most in spectrum auctions

NEW DELHI: Jio's spectrum purchase of Rs 571 billion ($8bn) was substantially higher than forecast (less than $3bn) and clearly there is some upside risk to the total capex forecast of $9bn over FY21-23, JP Morgan said.

"We also find the Chairman's comments about the spectrum purchase allowing it to enhance the experience for the 'next 300mn subscribers' as intriguing and some might read it as indicating that Jio remains focused on subscriber additions over tariff increases. We maintain our view that tariff increases over FY21-23 are likely going to be substantial, driving large earnings increases for RIL," it added.

RIL announced that its subsidiary RJIO (Jio) has acquired the right to use spectrum in all 22 circles across India in the recent spectrum auctions for a total cost of Rs571bn (~$8bn); this is substantially higher than our forecast of $3bn. Spectrum has been acquired across 800 MHZ, 1800 MHZ and 2300 MHZ, and with this total spectrum has increased by 55 per cent to 1717 MHZ.

Per RIL, the average life of spectrum now stands at 15.5 years and the acquired spectrum can be utilized for transition to 5G services. In terms of payment, upfront payment is Rs 199bn and deferred payment is Rs 378bn (spread over 18 years with interest computed at 7.3 per cent per year). "In our view there is likely going to be some associated capex though not very large. Overall we were forecasting a total capex of $9bn over FY21-23 (including spectrum purchases)", JP Morgan said.

UBS said in a note that spectrum auctions ended largely at reserve prices but both Bharti and Jio strengthened their overall spectrum footprint.

It added that Airtel's spectrum purchases broadly in line with estimates. Bharti acquired a total of 355MHz spectrum across various bands at a total cost of Rs 187bn (slightly below our estimate of Rs 220bn). These spectrum purchases included both renewal of expiring spectrum as well as additional spectrum in: 1)low band (800/900MHz) - with the company now having nationwide sub GHz spectrum; and 2)high-band (2300MHz) to support network capacity (30-40MHz of 2300MHz spectrum in all circles, versus 20-30MHz earlier). (IANS)

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