Kolkata: India’s Big 3 telcos are likely to conserve cash to participate strongly in a potential near-term 5G spectrum sale where mid-band airwaves in the 3.3-to-3.6 Ghz bands—essential for a broader 5G services roll out—amongst others are likely to be auctioned and base prices are reckoned to drop, say analysts.

Analysts estimate 275 units of airwaves in the 3.3-3.6 Ghz bands to be available in a near-term 5G auction and expect the government to cut overall reserve prices by 30-40% in a follow-up sale as a sizeable chunk of airwaves are likely to stay unsold in the upcoming 4G sale, starting March 1.

“Indian telcos are likely to conserve capital for a potential near-term auction of 3.4-3.6 Ghz spectrum bands that are more suited for 5G, and we thus expect bidding to remain subdued during the March auction,” Goldman Sachs said.

The government, though, is yet to clear the air on the timing of a 5G spectrum sale.

But CLSA expects a crash in spectrum prices ahead of a potential near-term 5G auction if bulk of the airwaves stay unsold in the March sale.

“Historically, the government has cut spectrum prices by 30-40% if it saw no demand in the previous auction…with significant spectrum estimated to stay unsold (in the March sale), there would be a follow-on crash in reserve prices, and this will be a big positive for 5G auctions,” CLSA said in a note.

It added that there would be good mid-band 5G spectrum supply as a whopping 275 units of 3.3-3.6 Ghzfrequencies would be available for just three telcos—Reliance Jio, Bharti Airtel and Vodafone Idea (Vi)—when the 5G auction happens.

In the immediate term, some 2,300 units of airwaves across seven 4G bands—from 700 Mhz to 2500 Mhz—worth Rs 3.92 lakh-crore at base price are being auctioned from March 1. But analysts expect the government to collect under Rs 50,000 crore as the most expensive 700 Mhz band is likely to stay unsold once again as in the 2016 sale.

To be sure, analysts expect Jio and Airtel to take fairly decent interest in some 4G bands in the March sale as both have 5G-ready networks and can do limited scale 5G roll outs in key markets with 4G airwaves. But they assert that a broader 5G roll out can happen only once the telecom department auctions 5G spectrum in the 3.3-3.6 Ghz bands.

Jio, Airtel and Vi’s respective earnest money deposits (EMDs) of Rs 10,000 crore, Rs 3,000 crore and Rs 475crore cap their potential spectrum payouts at Rs 70,000 crore, Rs 21,000 crore and Rs 3,300 crorerespectively in the March sale, said ICICI Securities.

Jio’s sharply higher EMD underlines its need to renew expiring 800 Mhz band spectrum that it owns and those of Reliance Communications it uses. It is also likely to bulk up on other 4G bands to address immediate needs of a rising user base consuming more data.

Goldman Sachs expects Airtel to “try closing its gap vs Jio in the sub-Ghz spectrum,” particularly to boost indoor coverage. Analysts, though, expect it to fill the gaps in six out of the eight circles in this sub-Ghz band in future auctions.

Loss-making Vi, which has an adequate spectrum footprint and a stretched balance sheet, is expected to target just the “bare essentials”.

For lighting, electrical, signage, and technology solutions that allow you to do more call Sverige Energy today at +4(670) 4122522.