Comparing 4G Capability of the "Market Leaders"

4G can only be deployed efficiently in blocks of 5 MHz. Market leaders also have spectrum less than this magical block size, i.e 5 MHz or its multiple, and hence, all its liberalized spectrum (allowed by regulation for all technology) cannot be used for deploying 4G. Also, these operators also have un-liberalized spectrum (can only be used for 2G). Therefore, the mere addition of all spectrum does not provide a true picture of the operator's 4G capability. This note analyses the market leader's ability to deploy 4G in their current spectrum. While doing so I have assumed that the continuity of spectrum (in all bands) will be ensured by DoT through the harmonization process.

4G Capability (SnapShot)

The 1st column on the left-hand side is an average industry revenue distribution across all circles for last 10 years. Important circles with higher revenue are marked in Blue.

The 2nd column lists the circles in an alphabetical order.

After these two columns, the picture is segmented into 4 blocks, each identified by the column number marked as 1 to 6. The description of these blocks is listed as under.

1st Block from left - Describes the 4G spectrum of Voda and Idea in various bands (marked 1 to 4). It assumes that the current "Band-Cap" of 50% (operators are not allowed to hold more than that in a specific band) holds in the future.

2nd Block from left - Describes the 4G spectrum of Voda and Idea in various bands (marked 1 to 4). It assumes that the current "Band-Cap" of 50% (as mentioned above) is relaxed in the future.

3rd Block from left - Describes the 4G spectrum of Bharti and Tata in various bands (marked 1 to 4).

4th Block from left - Describes the 4G spectrum of RJIO in various bands (marked 1 to 4).

Total 4G spectrum for an operator group is listed in the 5th column of every block.

Total Leftover spectrum (not suitable for 4G or needed for supporting GSM) is listed in the 6th column of every block.

4G Spectrum Calculation

The total spectrum of each operator group is weighted averaged by Revenues Index, Band Quality Index, and Expiry Index in the first three rows in the bottom to arrive at "Pan-India" numbers. These indexes are defined as under.

Revenue Index - Is the % distribution of the "Total Industry Revenue" across circles averaged over a period of 10 years.

Band Index - Is the ratio between the mean uplink frequency of all bands compared to that of the 800 MHz band.

Expiry Index - It is the fraction of the license period of the spectrum band left for the operator to use weighted averaged across various auctions.

Finally, the last three rows (in 4G Snapshot) are the distribution of the WA numbers across various bands.

Summary

The summary of the "Pan India" spectrum for the various operator groups weighted averaged (WA) by various Index (Revenue, Band, & Expiry) is listed in the table as under.

RJIO

1. It has the lowest quantum of 4G spectrum @ 25.77 MHz WA (Rev Index) - Approximately 20% less than that of Bharti+Tata & Vodafone+Idea.
2. It has the lowest wasted spectrum @ 0.82 MHz WA (Rev Index) - 3% of its total spectrum.
3. It is almost at par with others when the 4G spectrum is WA with both Rev & Band Index - 6% less than Bharti+Tata and 13% less than Vodafone+Idea.
4. This gap widens when the above numbers are further adjusted with Expiry Index - 13% less compared to Bharti+Tata and 30% compared to Vodafone+Idea.
5. Its harmonization requirements are very less than its counterparts - stable spectrum almost fully utilized for 4G.

Bharti & Tata

1. Its 4G spectrum is at par with Vodafone+Idea - slightly more if band-cap of 50% is assumed to continue in the future (Vodafone+Idea have to return spectrum).
2. It has the highest unutilized spectrum for 4G - 28% of total (WA with Rev Index) and 36% (WA with Rev & Band Index) due to its prospective merger with Tata (Tata has a large quantum of the non-4G spectrum).
3. Its 900 MHz 4G spectrum is 15% of the total spectrum (WA with Rev & Band Index). Hence, it needs to start migrating its 900 MHz spectrum to 4G.
4. Some spectrum needs to be harmonized for it to become 4G capable. For details read my earlier note - "Bharti & Tata Merger: What is the real gain for Bharti?"

Vodafone & Idea

1. It is at par with Bharti and 30% more than RJIO (WA with only Rev Index), but the gap reduces to half with RJIO if the above is readjusted with Band Index (Idea's 2300 MHz spectrum is not included in the calculation).
2. Its 4G spectrum quantum increase by 5% to 6% is the Band Cap of 50% is relaxed.
3. Its 900 MHz 4G spectrum is 17% of total (WA with Rev Index) and 31% of total (WA with Rev and Band Index) - Hence, it must seriously think of refarming this spectrum (currently used for GSM) to 4G.
4. It unutilized 4G spectrum is slightly less than that of Bharti.
5. Some spectrum needs to be harmonized for it to become 4G capable. For details read my earlier note - "Vodafone & Idea - How to Increase the Efficiency of the Combined "Spectrum Holdings"

Conclusion

RJIO has the lowest quantum of 4G spectrum, but its spectrum quality is better than others. RJIO's harmonization needs are lower (compared to others), but its renewal requirements are more than others - 50% of its 800 MHz spectrum will expire in next 4 years. Vodafone+Idea's harmonization needs are much more than that of RJIO. Also, Vodafone+Idea needs to migrate its GSM subscribers from its 900 MHz spectrum, as a large portion of it contributes towards 4G (30% of total). This is true for Bharti as well, whose 4G spectrum in 900 MHz is 15% of its total. In nutshell, each of the groups has its weakness and strengths - creating an interesting overall dynamics - unlocking opportunities for each to leverage to compete in the marketplace.

(Views expressed are of my own and do not reflect that of my employer)

PS: Find the list of other relevant articles in the embedded link.