India’s operators will pay out around INR1 trillion ($14.8 billion) at an upcoming spectrum auction, research firm Crisil said.

The top three operators, Bharti Airtel, Vodafone India and Idea Cellular, which account for three quarters of market revenue, are expected to account for 55 to 60 per cent of total spend at the auction.

Just last month, India’s cabinet approved a mammoth spectrum auction plan proposed by regulators. Initial reports said the auction was expected to raise a record INR5.6 trillion, surpassing the country’s last auction, which raised INR1.1 trillion.

However, Crisil’s estimate is more conservative.

Ajay Srinivasan, director at Crisil, said that “unlike previous auctions, operators this time do not face business continuity issues”, adding that “we expect reasonably healthy participation because incumbents will ramp up their 3G and 4G spectrum holdings ahead of Reliance Jio’s entry”.

Newcomer Jio opened its long-awaited LTE service to the public last month, but has stopped short of a full launch.

The report noted that “the aggression of individual operators in bidding will be influenced by their 3G/4G spectrum holdings in key circles and quantum of contiguous spectrum held”.

It also stated that in the current fiscal year, money spent towards spectrum acquisition would be INR370 billion, lower than the budgetary estimates of around INR560 billion, describing it as a “significant outgo for an industry reeling under INR4 trillion of debt as of March 2016.”

Crisil said operators are facing increased network congestion in circles with high data consumption, and that augmenting network capacity and spectrum holdings will be critical for maintaining their competitive position.

The research firm expects bidding for the 700MHz band “to be extremely selective with players preferring the less pricey 1800MHz”. Half of the spectrum put on the block in 1800MHz and 2100MHz, and most of the 800MHz and 900MHz blocks, will “be lapped up”.

It also said bidding interest in 2300MHz and 2500MHz “is expected to be limited”.

Meanwhile, it predicted that the large operators will spend around INR1.2 trillion over the course of the current and next fiscal year on spectrum payouts as well as network augmentation.

It noted that operators would need external funding of around INR0.5 trillion to meet their spectrum and network investments over the next two years, as profitability and cash flow is impacted by the launch of Jio’s services.

The report claims it is based on an analysis of “market position and spectrum holdings of operators, the trends and stupendous growth projected in data usage, and the likely competitive scenario”.