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2024 spectrum auction concludes; focus shifts to tariff hikes

The 2024 spectrum auction concluded, with an overall 141.4 MHz of airwaves auctioned for Rs113.4 bn. Except for the 1800 MHz band in Bihar and West Bengal, almost the entire spectrum was acquired at reserve prices, indicating low competitive intensity. As expected, Bharti was the most active telco, securing 97 MHz spectrum at an overall outlay of ~Rs69 bn, followed by Vodafone Idea with 30 MHz spectrum at an overall outlay of ~Rs35 bn. R-Jio didn’t have any spectrum up for renewal in the 2024 auction, and despite the highest EMD, restricted its bidding to select circles in 1800 MHz for an overall outlay of ~Rs10 bn. With the spectrum auction behind us, we believe the focus will now shift toward tariff hikes in the coming days.

Muted spectrum auction on expected lines; competitive intensity remained low

After a large outlay in 2021 (R-Jio’s large renewals) and 2022 (5G), the 2024 spectrum auction was expected to be a muted affair, with the focus largely on spectrum renewals. Overall, 141.4 MHz spectrum (~1% of spectrum put up for auction) across 900, 1800, 2100 and 2500 MHz band was awarded for an outlay of ~Rs113 bn (~12% of the overall spectrum reserve price). Except for two bands in 1800 MHz, the entire spectrum was awarded at reserve prices, indicating limited competitive intensity. The GoI would fetch ~Rs11 bn annually from the 2024 auction over the next 20 years.

Bharti: Highest outlay with focus on boosting mid-band and spectrum renewals

Bharti came into the auction with ~42 MHz spectrum up for renewal, but acquired 97 MHz spectrum across 900, 1800 and 2100 MHz bands for ~Rs69 bn (Rs6.7 bn annual installments). Apart from spectrum renewals, Bharti also boosted sub-GHz and mid band spectrum in select circles. Bharti now possesses at least 10 MHz sub-GHz spectrum in 10 circles. As we highlighted earlier, there was a case for Bharti to top up sub-GHz spectrum in a few more circles, but the focus seemed to be on boosting mid-band (1800, 2100 MHz) holdings instead.

Vi: Higher-than-expected outlay with focus on improving customer experience

Vodafone Idea had ~12 MHz spectrum up for renewal, but it acquired higher 30 MHz spectrum across 900, 1800 and 2500 MHz bands. Vi’s overall outlay of Rs35 bn (Rs3.5 bn in annual installments) was higher than our base-case expectation of ~Rs15 bn as it acquired 900MHz spectrum in 9 circles to improve 4G coverage. Vi also acquired spectrum in mid-band in MP and Bihar circles to improve network capacity. Overall, we view Vi’s higher-than-expected spectrum spend to boost network experience as a positive move.

R-Jio: Token participation as none of the spectrum was up for renewal

We were surprised by R-Jio’s high EMD as 1) none of its spectrum was due for renewal and 2) it had adequate spectrum holding post large spends in the past two auctions. R-Jio restricted its participation in the auction to two circles in 1800MHz band, acquiring ~14.4 MHz for an overall outlay of ~Rs10 bn. Interestingly, those two circles were the only ones where the “auction” actually took place with 1.5-2.5% price escalations above the reserve price.

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