India's leading telecom operators prepare for ₹96,317cr 5G spectrum auction
India's top private telecom operators, Reliance Jio, Bharti Airtel, and Vodafone Idea are set to participate in the upcoming 5G spectrum auction valued at ₹96,317.65 crore. The Department of Telecommunications (DoT) has confirmed the auction date as June 6, following a delay from its original start date of May 20 due to general elections. Unlike the previous auction in 2022, which saw an unexpected bidder from Adani group unit, this year's event has not attracted any new contenders.
Spectrum bands and market expectations for the auction
The spectrum auction will cover a broad range of bands, including 800MHz, 900MHz, 1,800MHz, 2,100MHz, 2,300MHz, 2,500MHz, 3,300MHz and 26GHz. However, industry insiders predict a tepid response as major telecom companies reportedly have sufficient 5G airwaves for their current needs. Selective purchasing is expected from Bharti Airtel and Vodafone Idea (Vi), who need to renew their airwaves in specific regions.
Renewal needs and market leader's position
Bharti Airtel needs to renew its airwaves in J&K, Odisha, Bihar, UP (East), West Bengal and Assam while Vodafone Idea must renew its spectrum in West Bengal and UP West circles. According to Jefferies's recent estimates, Airtel and Vi need to renew airwaves valued at approximately ₹4,200 crore and ₹1,950 crore, respectively. In contrast, market leader Reliance Jio does not have any spectrum renewals due this year.
Auction terms and telecom reforms
The winning bidders will be granted the spectrum for 20 years with an option to make payments in 20 equal annual installments. The DoT has also provided an option to surrender the acquired spectrum after a minimum period of 10 years. Notably, bidders are not required to submit any financial bank guarantees (FBG) or performance bank guarantees (PBG). Furthermore, airwaves procured in the auction will not incur any spectrum usage charges (SUC), aligning with telecom reforms initiated in September 2021.
