Spectrum auctions are immediately damaging on industry returns while the visibility on upside is clouded by rising competition. Post the latest auctions, Indian telcos are the most levered in the region.
Post the spectrum auctions, Vodafone and Idea have moved one position up in spectrum holding rankings (pushing down BSNL by two notches). Bharti and Jio remain the top 2 spectrum holders. Even now, Jio remains the market leader in liberalised (3G/4G) spectrum.
The just-concluded auctions were different from the earlier ones in that there was negligible?renewal?spectrum with almost all of it being?fresh?spectrum put up for sale, and the large incumbents were not under a 'do or die' renewal situation. In spite of this, total sales were no different from previous years ($10 bn+).
Incumbents may have met the basic coverage requirements in their key circles, but the focus would now shift to execution and competition. The latest development of Jio offering handset subsidies on iPhones is a worrying trend to watch given experience in other markets. In particular, we would be wary of subsidies being extended to other brands. We continue to stay cautious on the Indian telecoms sector
