The telecommunications spectrum auctions concluded on Tuesday after a day and a half of bidding, and the Center had revenues of Rs 77,814.80 million. The amount exceeded government and analyst expectations as telcos focused on renewing expiring spectrum and consolidating stakes in certain bands.
Reliance Jio, led by Mukesh Ambani, was the highest bidder by acquiring 488.35 MHz of spectrum for ₹ 57,122.65 crore, followed by Bharti Airtel who bid for 355.45 MHz of spectrum for ₹ 18,698.75 crore, while Vodafone Idea bid for just 11.80 MHz of air waves for ₹ 1,993.40 crore. The spectrum will be assigned to bidders for a period of 20 years.
At the auction, the first in almost five years, and one of the shortest with the participation of just three players, a total of 2308.80 MHz of spectrum in seven bands was put up for sale at a value of approximately ₹ 3, 92 lakh crore. Of this, offers were received for 855.60 MHz or 37% of the spectrum.
At the end of a total of six bidding rounds, no bids were received for the 700 MHz premium band or the 2500 MHz band. The 700 MHz band was also not sold during the previous 2016 auctions due to high prices.
The government expects to receive an advance payment of approximately ₹ 26,000-27,000 crore, of which ₹ 19,000-20,000 crore will be paid during the current fiscal year (before March 31, 2021), while the remaining payment will be received in December of 2021.
“Our estimate itself was 45,000 to 50,000 million rupees and we got offers worth 77,814.80 million rupees, which is much higher than expected,” Telecom Secretary Anshu Prakash told reporters, noting that the spectrum auction was held in the context of the pandemic and stress in the sector.
“… when we go to an auction, we put all the radio waves available, but we know that the bidder cannot buy everything, they buy only according to their needs,” he said.
Responding to a query, the Secretary said that the tender was conducted largely at the reserve price. “… Whether the offer exceeds the reserve price or not depends on the competition. There were only three bidders … So what each bidder seems to have done is consolidate position in each of their respective bands. In addition, a 5G auction will also be held. So I am not very sure that the telecommunications companies would have wanted to put all their resources in this auction ”.
In a press release, Reliance Jio said that it acquired spectrum in all 22 telecommunications circles, in the 800 MHz, 1800 MHz and 2300 MHz bands, and its proprietary spectrum footprint has increased by 55% to 1,717 MHz. Ambani , President of Reliance Industries, said: “With our largest spectrum footprint, we are ready to further expand the digital footprint in India, as well as prepare for the imminent rollout of 5G.”
Bharti Airtel, which bid for spectrum in all bands except 700 MHz and 2500 MHz, said the spectrum acquired during the auction gives the company “the most formidable spectrum holdings in the country.” It added that it has secured an India-wide footprint of the sub-GHz spectrum that will help improve its deep indoor and building coverage in all urban cities. “The entire spectrum will allow Airtel to offer 5G services in the future,” he said.
The Sunil Bharti Mittal-led firm also noted that the 700 MHz band bands did not receive any offers from operators, as it did not present any economic case for them due to high reserve prices. “The 700 MHz band together with the 3.5 GHz band has the potential to accelerate India’s progress towards the top league of digitally enabled nations. Therefore, the reserve price of these bands must be addressed with priority in the future, ”he said.
Meanwhile, Vodafone Idea, which bid for small amounts in the 900 MHz and 1800 MHz band, said the company had entered this auction with the most spectrum with a very small fraction pending renewal. “We have taken this opportunity to optimize spectrum retention after the merger to create more efficiencies in some circles,” he said.
Giving details of the auction, the Secretary said that of the total amount put up for auction in various bands, 65.22% was sold on 800 MHz, 38.87% was sold on 900 MHz, 42.87% on 1800 MHz , 8.57% in 2100 MHz and 89.29% in 2300 MHz. However, in terms of contribution to the government’s total revenue per auction, 800 MHz contributed 48%, followed by 1800 MHz (24% ), 2300 MHz (17%) and 900 MHz (10%).
Ankit Jain, ICRA Deputy Vice President, said the spectrum auction results have exceeded ICRA’s previous estimates.
“Telecommunications companies not only pushed for the renewal of the expiring spectrum, but they focused on consolidating their spectrum holdings in the 800 MHz, 900 MHz and 2300 MHz bands. Although the sub-GHz bands will be crucial for the development of 5G technology in the future, as well as for the improvement of indoor coverage, the appetite for the 2300 MHz band comes from the increasing use of mobile broadband and therefore from the need to improve the network capacity “.
Jain added that while the value of the total spectrum sold is only 19% of the total value of the spectrum on offer, after the auctions, the industry’s debt levels would rise to around ₹ 5 lakh crore as of March 31, 2022.
Most of Reliance Jio’s payment will be for spectrum in the 800 MHz band (Rs 34,491 million), followed by Rs 12,461 million for the 1800 MHz band and Rs 10,170 million for the 2300 MHz band. Bharti Airtel, the highest payout of ₹ 6,448 crore is for spectrum in the 900 MHz band, followed by ₹ 5,816 crore for 1800 MHz, ₹ 3,070 crore for 2300 MHz, ₹ 3,008 crore for 800 MHz and ₹ 355 crore for 2100 MHz.
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