Bids for the upcoming spectrum auction may not exceed Rs 80,000 crore due to stressed balance sheet of telecom operators and lack of ecosystem to encash premium airwaves in 700 Mhz band, an analysis by HSBC Global Research shows.

“Our initial analysis suggests that total proceeds from spectrum auction are unlikely to exceed $10-12 billion (about Rs 80,000 crore) and we believe a lot of spectrum might remain unsold in 700, 2300, 2500 MHz bands. We see good demand for 1800 MHz, selective demand for 2100 and 700 Mhz bands,” the report said.

The government plans to raise $83 billion (about Rs 5.56 lakh crore) from the upcoming spectrum auction, which will be potentially 2.8 times current revenues from the sector with an average net and debt Ebitda ratio of 4 times, the report said.

“Total spectrum to be sold in the upcoming auction exceeds 2,200 MHz, which is significantly above historical amounts sold and we don’t see a case for it,” it added.

The Cabinet on Wednesday approved the mega spectrum auction plan, in which airwaves worth Rs 5.66 lakh crore for mobile services will be put up for auction.

In the bidding, all airwaves available with the government for mobile services at present will be auctioned. It includes airwave frequencies in 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz and 2,500 MHz.

700 MHz spectrum in high subscriber density/large coverage markets like Bihar, UP, Rajasthan and West Bengal is cheaper than 900 MHz and incumbent telcos have the option to add 700 MHz spectrum selectively