The 5G spectrum auction may not witness aggressive bidding as enough radio waves are available, with few in the fray.

Analysts said the telecom sector may veer towards duopoly after the dust settles on the auction, which starts on July 26.

On the basis of earnest money deposited ahead of the upcoming spectrum auction, analysts said Vodafone Idea will considerably lag behind Bharti Airtel and Reliance Jio in 5G deployment, thus ensuring that the telecom market becomes a virtual duopoly.

They said the shift to 3G and 4G has led to rapid spread of data, and 5G may not lead to significant shift in usage initially.

5G may not offer materially higher ARPU, and players will take a reasonable time to ramp up their network. Thus, 5G may only help in network debottlenecking in limited locations and offer FWA (fixed wireless access) and enterprise solutions.

Adani’s earnest money deposit (EMD) of Rs 100 crore seems to have dissipated fears. Typically, telcos bid about 6 times to 10 times EMD in the spectrum auction.

In the case of Adani, it is being estimated that they will not bid more than Rs 9,000 crore for spectrum. Nomura in a report said zero spectrum usage charges have boosted Vodafone Idea’s (Vi) participation in the upcoming 5G auctions.

Vi will bid in all the 22 circles for 50MHz of spectrum pan-India in the mm wave band. It will bid for a minimal amount of spectrum in the 3.5 GHz band in specific circles such as the top metros and Circle A and Circle B.

“This accounts for 95 per cent of Vi’s access revenue,” the Nomura report noted. Both mm wave and 3.5 GHz are crucial bands for 5G deployment.

In comparison, according to analysts’ assessment, both Reliance Jio and Bharti Airtel would bid for substantive amount of spectrum in both these bands pan-India, which will ensure better 5G deployment.

The Nomura report said: “Bharti Airtel remains well positioned to compete against Reliance Jio in the upcoming 5G service roll-out. We think Bharti Airtel and Reliance Jio’s market share gains could accelerate further at Vi’s expense and the Indian telecom market could become a virtual duopoly.”

Brokerage Motilal Oswal said unlike previous auctions, there is abundant spectrum. limited participants and cap on spectrum bidding to limit the space to three-to-four sizeable players across 5G bands (viz. 700MHz, 3300MHz and 26GHz).

“Even if RJio (looking at its aggressive EMD) or any other player bids aggressively, it may not move the reserve price materially and will still leave sufficient room for all players to acquire spectrum, either in this or subsequent auction,” Motilal Oswal said in a research report.

The report said considering Reliance Jio goes full throttle acquiring 5G spectrum across all bands (10MHz/100MHz/1000MHz quantity in the 700MHz/ 3300MHz/26GHz band), it will still require subRs 80,000 crore at the current reserve price, way below the maximum allowance allowed under the EMD.

Bharti Airtel, the report said, would suffice for an investment of Rs 35,000-40,000 crore in the upcoming 5G auction, with 100MHz spectrum bid for in the 3300MHz band on a pan India basis. A total 72 GHz (gigahertz) of spectrum worth at least Rs 4.3 lakh crore will be on sale.