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5G Spectrum auction ends, Govt earns over Rs 1.5 lakh cr; Reliance Jio top bidder

Jio was the only applicant to have acquired spectrum in the coveted 700 Mhz band, which industry analysts say will give it a significant headstart over its competitors as far as consumer penetration of 5G is concerned.

5G auction, 5G auction news, 5G auction news, 5G news, 5G auction, 5G auction, indian express, jio 5g , adani 5G, indian express newsSince telcos like Airtel and Vi have a mix of both kinds of spectrum while Jio has all its spectrum through auctions, in 2016, the Centre fixed the SUC floor rate at 3 per cent of a telco's adjusted gross revenue (AGR).

India’s biggest ever spectrum auction ended Monday, with bids upwards of Rs 1.5 lakh crore coming in after seven days of bidding spread over 40 rounds, belying initial expectations that the auction process would be wrapped up in under three days. Reliance Jio emerged as the largest spender in the 5G spectrum auction, acquiring almost half of all the airwaves sold for more than Rs 88,000 crore, and was also the only one (among four applicants) to have acquired spectrum in the premium 700 MHz band.

A total of 51.2 GHz of spectrum was sold, of the total 72 GHz that was up for grabs – close to 71%. Union Minister of Communications Ashwini Vaishnaw said the total spectrum sold was “good enough” for covering all circles in the country, estimating “good coverage” of 5G in the next two-three years. The expected total first annual installment that the government will garner from the bidders has been pegged at Rs 13,365 crore.

Apart from high-speed data connectivity for users, 5G also has the potential to enable a number of enterprise-level solutions such as machine-to-machine communications, connected vehicles, and more immersive augmented reality and metaverse experiences, among others.

Reliance Jio spent Rs 88,078 crore and acquired a total of 24.7 GHz of spectrum in the 700 MHz, 800 MHz, 1800 MHz, 3300 MHz and 26 GHz bands, in line with analysts’ predictions.

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The country’s second largest telco, Bharti Airtel, shelled out Rs 43,084 crore to acquire a total of 19.8 GHz of spectrum in the 900 MHz, 1800 MHz, 2100 MHz, 3300 MHz and 26 GHz bands.

Explained

Earning above estimates

THE amount earned is far higher than what the government had anticipated, and the highest compared to the seven auctions since 2010. The highest so far was Rs 1.10 lakh crore in 2015.

Vodafone Idea spent Rs 18,799 crore and bid for the 1800 MHz, 2100 MHz, 2500 MHz, 3300 MHz and 26 GHz bands, acquiring a total of 6,228 MHz of airwaves.

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The fourth applicant, Adani Data Networks Limited, a subsidiary of the Adani Group that had applied to participate in the auction amid a chorus of disruption in the telecom sector, acquired spectrum only in the 26 GHz band and spent Rs 212 crore. The company had earlier clarified that it was participating in the race only to offer private networks solutions for business verticals like airports, ports, power generation and logistics, and not to enter the consumer mobility space.

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At Rs 1,50,173 crore, the final total bids have exceeded expectations, surpassing the government’s internal estimates of receiving bids of around Rs 1 lakh crore. According to sources, the government had initially anticipated that the 700 MHz band might not find any takers, especially since the band had gone unsold in the previous spectrum auctions in 2016 and 2022, owing to high price compared to other bands. This time, however, the 600 MHz band saw no takers.

The 700 MHz band, which is best suited for coverage in high-density areas, is ideal for data networks and consumer-led services. It received the second highest amount of total bids, at a value of Rs 39,720 crore.

The 3,300 MHz band saw the highest amount of bids at Rs 80,590 crore. The 26 Ghz millimetre band – which is ideal for enterprise level 5G applications including setting up private 5G networks – received the third highest amount of bids at Rs 14,709 crore.

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Jio was the only applicant to have acquired spectrum in the coveted 700 Mhz band, which industry analysts say will give it a significant headstart over its competitors as far as consumer penetration of 5G is concerned. The company has acquired 10 MHz of the band in each of the 22 circles. Its biggest competitor, Bharti Airtel, has not acquired any spectrum in the 700 MHz band.

Commenting on why the 700 MHz band received more than the anticipated bids, Vaishnaw said, “Globally the 5G ecosystem is very well developed in the 700 MHz band as it gives very wide base coverage. It can provide a range of 6-10 kilometres”. He added that in the 800 MHz-2500 GHz spectrum bands, the bidders bought airwaves primarily to increase their coverage of 4G and fill gaps in circles where the 4G network had started to congest.

In terms of the competitiveness of bidding in the latest auction, only the 1,800 MHz spectrum band saw the base price getting breached, whereas all the other bands were sold at their respective reserve prices. The competition in the 1,800 MHz spectrum was led largely by the Uttar Pradesh (East) circle which is the country’s largest mobile telephony circle in terms of subscribers with over 100 million cellphone connections.

Fierce bidding was witnessed especially in Assam, Jammu & Kashmir and Northeast circles in the 800 MHz band; Odisha and Uttar Pradesh (East) circles in the 1800 MHz band; and Bihar, Haryana, Kerala, West Bengal and Punjab circles in the 2,100 MHz band.

Payments for spectrum can be made in 20 equal annual installments, to be paid in advance at the beginning of each year. The bidders would be given an option to surrender the spectrum after 10 years, with no future liabilities with respect to balance installments.

First published on: 01-08-2022 at 07:27:46 pm
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