On June 25, Reliance Jio, Bharti Airtel, and Vodafone Idea started submitting bids for the latest 5G spectrum auction. The Indian government is selling airwaves worth Rs 96,238.45 crore.
According to a government statement, the auction aims to improve existing telecom services and ensure they continue uninterrupted. This aligns with the government’s goal of providing affordable, high-quality telecom services to all citizens.
Key Details of 5G Spectrum Auction
Mock auctions were conducted on June 3, June 13, and June 14 to help bidders get familiar with the e-Auction platform. The auction catalog was published on June 24 at 09:00 AM to ensure accurate bidder data. The government aims to raise about Rs 10,000 crore from the auction, but estimates vary between Rs 4,000 crore and Rs 16,600 crore. In the 2022 auction, the government achieved a record Rs 1.5 lakh crore.
Only about 17 percent of the spectrum value is expected to be sold, the lowest since 2014. Analysts predict that the spectrum will be sold near reserve prices due to a lack of excess demand.
The Department of Telecommunications (DoT) is auctioning 10,500 megahertz of mobile service radiowaves in eight bands starting at 10 am today, June 25. The available frequencies include 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz, 2,500 MHz, 3,300 MHz, and the 26 gigahertz (GHz) bands. Private companies like Reliance Jio, Bharti Airtel, and Vodafone Idea are participating in the auction. Based on estimates from brokerage reports, these companies are expected to spend around ₹15,000 crores on their purchases.
Validity, Payment Options, and Price Changes
The spectrum bought in this auction will be valid for 20 years. Telecom companies can share, trade, lease, and surrender the spectrum after 10 years. To save on interest costs, telecom companies might choose to pay the full amount upfront. The interest rate for deferred payments in this auction is 8.65 percent, which is higher than the 7.2 percent rate in the 2022 auction.
Payment options include part payments with corresponding moratoriums or 20 yearly installments, with the first due 10 days after the auction. Pre-payment is allowed without any penalty. For this round of the spectrum auction, the Department of Telecommunications (DoT) excluded the 600 MHz and 700 MHz bands. The DoT also increased reserve prices by 12 percent for the 3,300 MHz band and 8.9 percent for the 26 GHz band. The spectrum prices have also increased by 11-14 percent in bands or circles that saw demand in the 2022 auctions.
Bids by Reliance Jio, Bharti Airtel, and Vodafone Idea
Reliance Jio, Bharti Airtel, and Vodafone Idea have submitted Rs 4,350 crore as earnest money deposits for the 5G spectrum auction.
- Reliance Jio deposited the highest amount, Rs 3,000 crore.
- Bharti Airtel deposited Rs 1,050 crore.
- Vodafone Idea deposited Rs 300 crore.
Based on these deposits, the companies can bid three to four times the amount they deposited.
Reliance Jio, Bharti Airtel, and Vodafone Idea Plans in 5G Spectrum Auction
- Reliance Jio could potentially bid the most, considering its substantial earnest money deposit, but the available information did not detail specific spending plans for the auction.
- Bharti Airtel is expected to be the biggest spender in the 2024 auction, with an estimated outlay of Rs 10,400 crore. Analysts believe Airtel aims to strengthen its holdings in the sub-1GHz range and increase its share of the 1800-MHz and 2300-MHz bands. Airtel needs to renew the 42 MHz spectrum in six circles: Assam, Bihar, J&K, Orissa, UP East, and West Bengal. Recently, the company cleared its past spectrum auction dues to save on interest costs.
- Vodafone Idea is expected to renew its 900 MHz spectrum in UP West and Bengal circles. According to IIFL, Vodafone Idea may pick up 5 MHz and 4.6 MHz in these bands.
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