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India to auction ₹96,318 crore telecom spectrum on Tuesday

By admin Jun25,2024

The Department of Telecommunications (DoT) will begin the auction of 96,317.65 crore of spectrum on Tuesday.

Representational (Bloomberg)

The background

On February 8, the Union Cabinet approved the auction of 10,523.15 megahertz (MHz) of spectrum across bands at a reserve price of 96,317.65 crore, Business Standard wrote.

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All unsold spectrums from the last sale will be up for bidding again, with airwaves in the 800, 900, 1800, 2100, 2300, 2500, 3300 MHz and 26 GHz bands, covering a large chunk of voice and data spectrum up for sale.

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Reliance Jio, Bharti Airtel and Vodafone Idea have collectively put up 4,350 crore for the bidding, the DoT has announced.

This is five-times smaller than the last 5G spectrum auctions in 2022, Business Standard wrote.

Companies get points based on the EMD (earnest money deposit) amount they have deposited, which enables them to bid for the number of circles and quantity of spectrum they want. Higher points mean a higher capability to place bids. Telcos can bid for spectrum worth up to 12-times their EMD. Combined with much lower demand for spectrum and a cautious stance adopted by market leader Reliance Jio, the auctions will be a more muted affair, a recent note by IIFL Securities said.

While all unsold spectrum from the last sale is up for bidding again, the quantum of spectrum on offer has shrunk by more than seven-times since 2022, according to Business Standard.

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The players

Jio (108 million) and Airtel (72 million) have seen their 5G penetration rise to about 20-22% of their subscriber bases, according to the article.

Airtel will add at least 25,000 5G sites in the circles of Maharashtra, Gujarat, Madhya Pradesh and Chhattisgarh, Kerala and West Bengal to improve rural coverage, for which it has adequate spectrum, Mint wrote.

Vodafone Idea has decided against renewing some its spectrum in the circles of West Bengal and Uttar Pradesh West, where renewals for 12 MHz in the 1800 MHz and 900 MHz bands were due.

Therefore, it would end up reducing its spend on renewals from 1,500 crore to 200 crore for just the 900 MHz band, according to the Mint article.

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The government

While Mint had reported earlier this year that the government is expecting to mop up about 10,000 crore from the sale, various brokerage reports leading up to the sale on 25 June have said that the auctions may fetch the government anywhere between 4,000 crore and 16,600 crore.

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