Rival telcos' deft moves in spectrum auction may compound Voda Idea's woes

The positioning of Vodafone Idea - which picked up modest 11.80MHz spectrum - could potentially "worsen" as rival telcos will be able to boost their coverage and capacity after buying additional radiowaves in the just-concluded auctions, according to a report.

Vodafone Idea has acquired spectrum to cover minor gaps in five circles for ₹1,993.4 crore, while Bharti Airtel shelled-out nearly ₹18,700 crore for 355.45MHz radiowaves and Reliance Jio a whopping ₹57,123 crore for 488.35MHz spectrum.

India's first auction of telecom spectrum in five years ended on Tuesday with ₹77,814.8 crore of airwaves being acquired by telcos and billionaire Mukesh Ambani's Reliance Jio spending the most.

"VIL's positioning may possibly worsen as other operators will be able to enhance their coverage and capacity further post-acquisition of additional spectrum in the recent round," a note by Kotak Institutional Equities said.

The deft moves by Bharti Airtel and Reliance Jio in shoring up their spectrum holding will allow the two telcos to enhance their user experience further, "compounding woes for VIL".

Airwaves come in different bands which support different propagation characteristics for transmission of voice and data. For instance, lower bands like 800 MHz and 900 MHz support a good indoor coverage while higher bands like 2300 MHz have a good carrying capacity.

The airwaves are also sold in quantities measured as MHz. The auctions allows companies to use government-owned airwaves for carrying signals for data and voice for a particular period of time.

Reliance Jio Infocomm has acquired the right to use spectrum in all 22 circles or zones across India, in the auctions. Jio has bagged spectrum in bands such as 800 MHz, 1800 MHz and 2300 MHz, and its spectrum footprint is up by 55 per cent to 1,717 MHz.

As per the telecom department data, Vodafone Idea (VIL) has bought 5.8MHz spectrum in 900-band and 6MHz in the 1800-band. It has acquired spectrum in 900 band for ₹1,274 crore and 1800 band for ₹719 crore.

In contrast, Jio, in the 800 MHz band, has acquired spectrum for ₹34,491 crore, in 1800MHz for ₹12,461 crore, and in 2300MHz for ₹10,170 crore. Bharti Airtel has paid maximum for 900MHz band ( ₹6448 crore), 1800MHz ( ₹5,816 crore), 800MHz ( ₹3,008 crore), 2300MHz ( ₹3,070 crore), 2100MHz ( ₹355 crore), Telecom Secretary Anshu Prakash had said earlier this week.

Kotak report said, "Bharti and Jio picked up a significant share of spectrum on offer across key bands to cover up for the bandwidth expiring later this year, while also preparing to expand their coverage as well as capacity across the country. On the other hand, VIL increased its holding marginally on an already large spectrum portfolio".

VIL anyway has a large spectrum holding, which is comparable to the now expanded portfolios of Bharti and Jio.

"However, VIL's capacity has been lagging behind other operators due to limited investments in network infrastructure given their high leverage and constrained balance sheet," it pointed out.