Reliance Jio bids for spectrum worth Rs 57,000 crore as 4G auctions draw to a close. Airtel bids for airwaves worth nearly Rs 19,000 crore. The government realises about 20 percent of the total value of spectrum up for grabs, which was pegged at nearly Rs 4 lakh crore. Tarun Lakhotia, Director at Kotak Institutional Equities discussed more on these.

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“Jio always had a capacity advantage, which has worked well for them. In the last year or two, some of the data suggested that user experience in Jio was lagging behind Bharti Airtel and Vodafone Idea in quite a few circles, so they needed to address the capacity constraints given the higher utilisation or throughput that they were able to achieve in their network,” he said.

On Jio’s capacity, Lakhotia said, “In that regard, the bidding – while it may seem aggressive – the idea for Jio would be to rebuild the capacity advantage to again be able to offer to data services, to a larger base of customers. Their recent initiative suggests they are targeting a larger market, potential 300 million of 2G subscribers, so all of them fall in sync with what final Jio’s numbers are in terms of spectrum acquisition and the outlay that they have.”

On valuations, he said, “We have not changed our fair value for either of the companies. For Reliance Jio it remains at Rs 2,050 per share and for Bharti Airtel, it is at Rs 710 per share.”

Subscriber gains continue to augur well for Bharti Airtel, Lakhotia added.

“Bharti has been able to do well in the last several months. We have seen a consistent performance in terms of incremental subscriber additions and the subscriber additions are more on the 4G smartphone side as compared to feature phone where probably Jio is able to get more traction. The subscriber gains for Bharti could continue to augur well.”

“With the spectrum – they have judiciously used their balance sheet to acquire a reasonable amount of spectrum across the sub gigahertz bands as well as the capacity part. So I think they are now comparable in terms of the overall footprint that they have across circles with Jio as well as Vodafone Idea Ltd. They have the largest spectrum holdings and that should help them in building that capacity to service the requirements of their premium customers going forward.”

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Disclosure: RIL, the promoter of Reliance Jio, also controls Network18, the parent company of CNBCTV18.com.

(Edited by : Ajay Vaishnav)

First Published:Mar 3, 2021 11:08 AM IST