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The brokerage said that higher reserve price is likely to disincentive any new telcos to bid in the auction and only telcos with strong balance sheets like RIL and Bharti are in a position to buy pan India 5G<\/a> spectrum.
“...it remains unclear how VIL<\/a> would fund its 5G bids. Given VIL mgmt’s focus on top core circles, we believe the company may selectively bid in their core 3G\/4G circles. Post 5G, we believe VIL would be further vulnerable if it doesn’t have pan India 5G spectrum,” BoFA Securities said in a note based on its interaction with telecom industry<\/a> participants and experts
BoFA said that telcos may be interested in 3.5 GHz in this auction as its primary band for 5G. 700 MHz may garner limited interest given its high pricing and as its propagation characteristics are similar to that of 800\/900 MHz (which telcos already have). “Interest on 28 GHz likely in the next auction even if the government decides to auction this time.”
The brokerage said that Jio would likely be aggressive in looking to deploy 5G –especially SA 5G as it doesn’t have a higher proportion of postpaid\/high end users, which would force other telcos also to front load capex investments.
“If Jio rolls out SA 5G network, then it would also force Bharti to do the same, further front-loading 5G investments. Jio may be looking at SA network given its one vendor 4G network. It would be easier for them to move from one vendor to multiple ones. SA 5G also provides Jio an opportunity to forklift or completely change any legacy radio in the network,” it said.
The killer app for 5G is network “slicing” wherein they could configure the network to give better speeds or offerings on various use-cases like gaming SIMs.
BoFA said that telcos could charge more for such differentiated SIMs. NSA could support limited slicing use-cases, hence telcos would need to move to SA architecture to offer the “mature” slicing applications.