Post the 2016 Mega Telecom spectrum auction we see limited need for telcos to bid any additional spectrum for next 18-24 months at least given current low capacity utilization (est. 10-20%).
We also do not see the need for telcos to go for 700 MHz for next 18-24 months despite any reduction in its reserve price as the ecosystem is not mature. We consider the next stock price driver to be 3Q results as impact of Jio?s free services would be visible then.
(we expect limited impact on 2Q results from Jio free services). Jio currently has 16 mn subs (had c. 5.5 mn before commercially launching service on Sept 5) and remains on track for achieving 20-25 mn subs by Dec-end ? a minimum mass it needs before it starts commercially charging consumers in our view.
