Shares of telecom stocks will be in focus today after the 5G spectrum auction for mobile radiowave services concluded on Wednesday. The three major telecom operators - Reliance Jio, Bharti Airtel, and Vodafone Idea - have collectively bid ₹11,340.78 crore for a total quantum of 141.4 Megahertz (MHz) spectrum auction conducted by the Department of Communication (DoT). Of the spectrum on offer, 26% of MHz was sold (excluding non-bids band). Bharti bagged 69% of the total MHz on offer, followed by VIL at 21%, and RJio at 10%.
Shares of Bharti Airtel, the biggest bidder in the spectrum auction, opened marginally higher at ₹1,466.85 against the previous closing price of ₹1,458.55 on the BSE. Paring opening losses, the telecom heavyweight declined as much as 1% to ₹1,444.10, while the market capitalisation slipped to ₹8.21 lakh crore.
On the other hand, shares of Vodafone Idea gained as much as 1.8% to ₹18.34 against the previous closing price of ₹18.02 on the BSE. The market cap of the telecom operator rose to ₹1.23 lakh crore.
Meanwhile, shares of Reliance Industries rose 0.7% to touch a fresh 52-week high of ₹3,048.85 on the BSE after its telecom arm, Reliance Jio, secured bids in the spectrum action. The market cap of the country’s most valued firm climbed to ₹20.58 lakh crore.
As per the data released by the ministry of communications, Bharti Airtel was the biggest bidder in the spectrum auction, acquiring 97 MHz 5G spectrum in 900 MHz, 1800 MHz, and 2100 MHz frequency bands through the auction for ₹6,856.76 crore.
Reliance Jio, telecome arm of Reliance Industries, has acquired the right to use 14.4 MHz spectrum in the 1800 MHz band in 2 circles- Bihar and West Bengal - for ₹973.63 crore.
Meanwhile, debt-laden Vodafone Idea Limited (Vi) acquired 30 MHz of spectrum across the low and mid bands (900 MHz, 1800 MHz, and 2500 MHz) in 11 circles for a total investment of ₹3,510.40 crore.
The spectrum auction, which started on June 25 at 10:00 AM and concluded on June 26 at 11:45 AM after 7 rounds, received a lukewarm response as total bids worth ₹11,340.78 crore were placed by the three key telecom players. All the unsold spectrum of previous auction held in 2022 in 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz, 3300 MHz, and 26 GHz bands were put for bidding. Within the band range, 900 MHz received the highest bids worth ₹7,060 crore (62% of total bids), followed by 1800 MHz worth ₹3,580 crore (32% of total bids), and 2100 MHz/2500 MHz worth ₹550 crore/₹150 crore (5%/1% of total bids).
Domestic brokerage Motilal Oswal Financial Securities in a note says that the DoT may receive the full payment of ₹6,860 crore from Bharti, while VIL can opt for yearly installments — ₹350 crore upfront and the rest over the next 20 years. RJio’s payments may be adjusted from its earnest money deposit (EMD). The annual instalments of VIL and Bharti (if opted for installments) will be around 3% and 1%, respectively, of their EBITDA.
“We believe Bharti can opt for the full payment option; if not, this will increase its net debt by 4.6% to ₹1.4t. The annual installment (of ₹670 crore) will be 1% of its EBITDA,” Motilal Oswal says in its report.
“VIL can opt for either 20 equal installments (of ₹350 crore) or upfront payment of minimum two years and then installments for the remaining 18 years. This can increase its debt by 1.4% to ₹2.3t. The annual installment (of ₹350 crore) will be 2.7% of its EBITDA,” it adds.
As per terms of the spectrum auction, the above spectrum cost can be paid over 20 equated annual instalments, with interest computed at 8.65% per annum.
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