June 25th 2024.
The much-awaited auction of radio waves used for mobile services had a slow start on Tuesday in New Delhi. The five rounds of bidding on the first day only attracted bids worth around Rs11,000 crore from various telecom companies. The government had put up over 10,500 Mhz spectrum in eight frequency bands, valued at Rs96,238 crore at the base price, for this auction.
Sources revealed that telecom operators like Reliance Jio, Bharti Airtel, and Vodafone Idea were actively participating in these auctions, which were being held after nearly two years. The competition was high as these radio waves are crucial for the development of high-speed 5G mobile services.
According to the Department of Telecom's report on the first day of the auction, most of the bidding took place in the 900 and 1800 Mhz bands. Some bids were also placed for the 2100 Mhz band spectrum in three circles. A source mentioned that the bids in the 900 and 1800 Mhz band seemed to be part of telecom operators' strategy to replenish their resources.
Bharti Airtel and Vodafone Idea had spectrum expiring in six and two circles, respectively. As per a report by JP Morgan, Vodafone Idea needed to decongest its existing network by using the 900, 1800, and 2100 Mhz bands over the next couple of quarters.
Telecom expert Parag Kar estimated that the 1800 Mhz band drew bids worth Rs6,306.4 crore, 900 Mhz attracted bids worth Rs4,465 crore, and 2100 Mhz saw bids worth Rs360 crore on the first day. However, there were no bids placed in the remaining five spectrum bands.
The details of the bids placed by each operator were not immediately available and will be announced after the auction concludes. In the initial rounds, telecom operators showed interest in four spectrum bands- 900 MHz, 1800 MHz, 2100 MHz, and 2500 MHz. The auction entered its fourth round around 3 pm, according to another source.
As expected, the current auction has been relatively low-key compared to the previous one in 2022, which was a seven-day affair and saw a record sale of over Rs1.5 lakh crore worth of 5G telecom spectrum. Billionaire Mukesh Ambani's Jio emerged as the top bidder, acquiring almost half of the airwaves. Sunil Mittal's Bharti Airtel and Vodafone Idea also made successful bids of Rs43,084 crore and Rs18,799 crore, respectively.
Industry analysts had predicted that the current bidding would be muted, with telecom operators showing a selective appetite for radio waves. They estimated that Bharti Airtel would bid for some of its expiring spectrum, while Jio, which already has adequate spectrum across 4G and 5G bands, may be more selective in its bidding.
The earnest money deposit (EMD) submitted by telecom operators for this auction ranged from Rs300-3000 crore, which is the lowest since the auctions in 2014 and 80% lower than the previous one in 2022. Reliance Jio submitted the highest EMD of Rs3,000 crore, giving them the potential to bid for the maximum radiowaves among the three telcos. Bharti Airtel and Vodafone Idea submitted EMDs of Rs1,050 crore and Rs300 crore, respectively.
The Director General of Cellular Operators Association of India, SP Kochhar, believed that the 5G auctions would catalyze the rapid rollout of 5G services across the country, leading to enhanced coverage and improved connectivity. He also mentioned that these auctions would bridge the digital divide and provide even the most remote areas with access to high-speed internet, promoting economic opportunities and social advancement.
Kar's analysis suggested that Jio may only be interested in bidding for the 800 Mhz band, which could bring in an estimated cash flow of Rs18,000 crore. He also mentioned that Bharti Airtel's approach in this auction was to consolidate and enhance their spectrum efficiency, with a total outflow of Rs11,512 crore at the reserve price. The auction will resume on Wednesday for the sixth round, and the outcomes are expected to lay a strong foundation for a prosperous and digitally empowered India.
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