The spectrum auction that will kick off on March 1 will be muted, analysts at Goldman Sachs have said in a report citing Vodafone Idea’s weak balance sheet and a possibility that telcos will hold their fire till the 5G auction.

In the upcoming round, the government is not offering 5G in the 3300-3600 Mhz band. It is putting on the block 2309 Mhz of spectrum in seven bands —700 Mhz, 800 Mhz, 900 Mhz, 1800 Mhz, 2100 Mhz, 2300 Mhz and 2500 Mhz. The brokerage expects no bids in the high-priced 700 Mhz band.

“Of the seven bands being put up for auction, we expect bidding to stay restricted to 3-4 bands, mostly to meet renewal demand, and to selectively add some coverage spectrum.

“About a third of the spectrum being auctioned is in the 700 MHz band, which was unsold during the 2016 auctions, and we expect a similar outcome in 2021 despite a 43 per cent price drop; Operators are unlikely to diversify into a new band that would require investment in equipment, when other bands are available at lower prices,” it said.

It forecast that there will be limited incremental impact of the upcoming auction on the balance sheet of telcos. Goldman Sachs expects an upfront payment of Rs 6,100 crore and Rs 5,100 crore from Airtel and Jio, respectively. However, Vodafone Idea’s net-debt-to-EBITDA ratio will restrict its ability to participate.

Ahead of the auction, Bharti Airtel had raised $ 1.25 billion through issuance of debt instruments. Vodafone India is also planning to raise funds through a mix of equity and debt.