India gears up for spectrum auction worth over ₹96,300 crore
India is set to kick off its spectrum auction today, with airwaves valued at a whopping ₹96,317.65 crore up for grabs. The Department of Telecommunications (DoT) will oversee the auction which includes radio frequencies across eight different bands. Top private sector telecom operators such as Reliance Jio, Bharti Airtel, and Vodafone Idea, are expected to compete for these available frequencies.
Telecom giants projected to spend ₹15,000 crore
The three telecom giants, Reliance Jio, Bharti Airtel, and Vodafone Idea are projected to spend around ₹15,000 crore, on acquiring spectrum across 4G and 5G bands. This estimate is based on reports from various brokerage firms. Despite the high valuation of the airwaves, a relatively subdued auction is anticipated due to sufficient 5G spectrum holdings already held by these operators, and the present low adoption rate of 5G technology.
Government's revenue expectations from spectrum auction
The Centre aims to raise approximately ₹10,000 crore from the auction. However, brokerage reports estimate the revenue could be between ₹4,000 crore and ₹16,600 crore. In comparison, the previous auction in 2022 fetched a record ₹1.5 lakh crore for the government. This time around, only about 17% of the total spectrum value is tipped to be sold.
Auction process and bid submission begins
The auction process in India begins with the Telecom Regulatory Authority of India (TRAI) assessing market demand, and recommending reserve prices and auction rules. This is followed by stakeholder consultations involving telecom operators to refine auction parameters. The DoT then designs the auction framework, specifying frequency bands, spectrum quantity, and auction formats. Bharti Airtel, Reliance Jio, and Vodafone Idea began submitting bids on June 25 for this round of the 5G spectrum auction.
Spectrum auction reserve prices increased
For this round of auction, the telecom department excluded the 600 MHz and 700 MHz bands, and increased reserve prices by 12% and 8.9% for the 3,300 MHz and 26 GHz bands, respectively. The spectrum prices also saw an increase of between 11-14% in bands or circles that experienced demand in previous auctions. This strategic move is expected to impact the bidding process significantly.
Telecom operators' earnest money deposits revealed
Reliance Jio, Bharti Airtel, and Vodafone Idea have deposited ₹3,000 crore, ₹1,050 crore, and ₹300 crore respectively as earnest money deposits for the auction. These deposits allow telecom operators to bid three to four times the amount based on these initial amounts. Bharti Airtel could potentially be the largest spender in this auction with an outlay of ₹10,400 crore, as it aims to strengthen its sub-1GHz holdings and increase its stake of 1,800 MHz and 2,300 MHz bands.
