“With large SUC savings, the net annual outlay for spectrum for telcos would require (either) modest 4% incremental tariff hikes (on overall subscribers), or a 30% premium for 5G plans (vs the popular 84 day, 1.5GB/day 4G plan),” said Nomura Research. It said the quantum of incremental tariff hikes or 5G premium would be higher for Jio compared with Bharti
and Vi as the market leader’s annual net spectrum outlay – after factoring in yearly SUC savings – is significantly higher at ₹5,290 crore than for Bharti Airtel (₹1,430 crore) and Vi (₹720 crore).
“Bharti/Vi require modest 2% incremental tariff hikes for their net spectrum outlay while Jio would require a higher 7% hike, which should improve the outlook on future tariff hikes and telcos’ ability to charge a premium for 5G vs 4G,” said Nomura.
Jio was the largest bidder, spending a whopping ₹88,078 crore on 5G airwaves in the spectrum auction that ended on Monday. Bharti Airtel and Vi bought airwaves worth ₹43,084 crore and ₹18,799 crore, respectively. said the large spectrum holdings of existing operators rules out the entry of a new player in industry.
Goldman Sachs estimates that lower SUC payouts after the auctions would result in annual cash flow savings of ₹3,400 crore, ₹2,900 crore and ₹1,500 crore for Jio, Bharti Airtel and Vi, respectively from 2023-24 onwards. Brokerage IIFL added that SUC (including on microwave spectrum) would come down to 1%, 1.2%, and 1.8% for Jio, Airtel and Vi, respectively, resulting in Ebitda margin expansion of 260bps, 300bps and 210bps for the three telcos.
Bharti Airtel shares closed down 1.1% at ₹686.60 on the BSE on Tuesday while Vi’s ended 3.2% higher at ₹9.41. Shares of
closed 0.3% higher at ₹2,583.1.