900 MHz spectrum expected to sell for four times the reserve price: HSBC Research


NEW DELHI: Government proceeds are expected to be $ 9 billion from the upcoming spectrum auctions, 20 per cent higher than the government's own estimates, according to a study by HSBC Telecom and Media Global Research.

The research also says that it is possible that in a few markets the cost for 5 MHz of 900 band may exceed the 3G prices as well.  

The estimates are 1.4 times higher than the reserve price recommended by the Telecom Regulatory Authority of India (TRAI) for 900 MHz spectrum band. For 1,800 MHz band, the estimates are 1.2 times of the reserve price suggested by TRAI, the report adds.

Demand for data spectrum is likely to be a key driver in the upcoming spectrum auctions, if one goes by earlier auctions. At present, the two top players who are better placed to add more spectrums - Idea and RCOM – are likely to be more defensive, according to the study.

It further noted that there is uncertainty for both investors and operators whenever there is talk of spectrum auction.

The spectrum auction earlier this year saw an unexpected contest for 1,800 MHz spectrum as the entry of pure 4G players forced incumbent operators to add 4G spectrum selectively, stated the research paper.

Moreover, it added that the most interesting trend has been robust data revenue growth (data revenue growth in FY14 was 90 per cent year on year for the top three players).

“While this is positive, it raises the need for additional capacity spectrum (incumbent telcos are already talking about congestion particularly in metro markets with 20 per cent to 30 per cent of their BTS). Operators have so far been highlighting the need to add data footprint but in the markets where they have 5MHz of spectrum, and it will be important for them to get to 10MHz sooner than later (over the next couple of years) to accommodate data growth,” the research revealed.

The study has found that ‘doubling of spectrum will more than double the throughput for telcos and in turn allow them to benefit from lower per unit costs as well with doubling of spectrum.’ 

The need for capacity spectrum, the study said, is likely to drive prices up for spectrum in the upcoming auctions.  

While both Bharti and Idea face auctions in some of their key markets, the latter has more exposure in the upcoming auctions versus Bharti. The study says this implies that telco Idea is likely to focus more in retaining spectrum in existing markets.

On the other hand, the top two players Bharti and Vodafone could look at adding more spectrum in the 900 band, according to the report. HSBC was positive on Bharti with a target price (TP) of Rs 481 and Neutral on Idea Cellular with a TP of Rs 172. The key downside risk for Bharti will be losing spectrum in the 900 MHz band.  The key upside risk for Idea will be the release of additional data spectrum and the key downside risk will be losing spectrum in the 900 band. The study is somewhat negative on RCOM with TP of Rs 100 and the key upside risk for them will be ability to benefit from spectrum trading. 

Latest Reads

Indians binge watch Netflix faster than global average

India saw a massive rise in Netflix binge-watching this year. Here’s a flashback at the most intriguing streaming moments that defined the platform’s viewership in 2017.

iWorld Over The Top Services
Semi-urban connect helps FilterCopy attain top slot on Facebook

MUMBAI: It’s time to pour a nice cup of filter coffee because it’s no small feat to beat a giant like Buzzfeed. According to a report by Vidooly, FilterCopy page ranked top on Facebook with more than 71 million (71,128,760) views in new age entertainment category with 27.4 million (2,743,641)...

iWorld Social Media
RIL to plan IPO for Reliance Jio: Bloomberg

Reliance Industries Ltd (RIL) may launch the initial public offering (IPO) for Reliance Jio by late 2018 or early 2019 to further challenge the collective might of Airtel and the Idea-Vodafone combine, according to a Bloomberg report. Reliance Jio, which hasn’t made a profit since its official...

iWorld Telecom
Health & beauty YouTube's fastest growing vertical in 2017 for India

YouTube remains the top video entertainment hub – with over 225 million Indian smartphone users, using the app every month. India also reached not one, but two major YouTube milestone this year, with 200 channels now crossing the one million subscriber mark and three channels achieving 10 million...

iWorld Video On Demand
Regional content on ALTBalaji to constitute 15% of show hours

MUMBAI: The year 2017 has witnessed the phenomenal growth of regional languages, such as Tamil, Telugu, Malayalam, Gujarati, Marathi and Bengali, over Hindi and English. OTT players like ALTBalaji, Viu, Amazon, SonyLIV, Voot, Hotstar, Netflix, and YuppTV have taken a deep dive into offering...

iWorld Over The Top Services
Mastiii and PEN tie-up for win-win deal

Mastiii is all set to make a mark in the mobile app industry. The channel will soon expand its digital footprint via an exclusive content association with PEN India and will be available on its latest, Bollywood Times Mobile App, a one-stop destination for entertainment needs starting 9 December...

iWorld Over The Top Services
Focus shifts to online streaming for Eros

Mumbai: Production and distribution company Eros International no longer wants to be a film studio but a digital content company.

iWorld Video On Demand
Apple to acquire Shazam

Apple is making another big move this year. The Cupertino-based company is acquiring Shazam to bolster its music services. According to TechCrunch, Apple is all set to buy the popular music-recognition app in a nine-figure deal that could be valued around $401 million.

iWorld Over The Top Services
Green Gold, Amazon Prime put Kerala martial art on the map

MUMBAI: Green Gold Animation is rediscovering Kalaripayattu, a lost martial art form of Kerala. With the purpose to educate through entertainment, the animation studio is making an exclusive series for Amazon Prime titled Kalari Kids. The series will be launched around Christmas with 20 episodes...

iWorld Over The Top Services

Latest News

Load More

Sign up for our Newsletter

subscribe for latest stories