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5G auctions: who’s bidding, and what’s at stake for whom

A total of 72 GHz of airwaves will be up for bidding, with participation from four entities — Reliance Jio, Bharti Airtel, Vodafone Idea and Adani Data Networks.

The auction will be held for spectrum in the frequency bands 600 MHz, 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz, 3,300 MHz and 26 GHz.

The country is poised to take a major step towards the 5G era with its biggest-ever spectrum auction beginning Tuesday. A total of 72 GHz of airwaves will be up for bidding, with participation from four entities — Reliance Jio, Bharti Airtel, Vodafone Idea and Adani Data Networks, a subsidiary of the Adani Group. They have submitted earnest money deposits (EMDs) — a key marker of bidding intent — to the Department of Telecommunications (DoT). Reliance Jio has put in Rs 14,000 crore, compared to Rs 5,500 crore by Bharti Airtel, Rs 2,200 crore by Vodafone Idea, and Rs 100 crore by the Adani Group.

Which bands will be auctioned?

A total 72,097.85 MHz (72 GHz) of spectrum with a validity period of 20 years will be put on auction from July 26. The auction will be held for spectrum in the frequency bands 600 MHz, 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz, 3,300 MHz and 26 GHz.

“It is expected that the Mid and High band spectrum will be utilised by telecom service providers to roll out 5G technology-based services capable of providing speed and capacities which would be about 10 times higher than what is possible through the current 4G services,” according to a statement by the Union Cabinet issued last month.

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What is the significance of the EMD amount?

The amount of EMD signals the intent of a company about the amount of spectrum it wishes to buy as it indicates its bidding strategy and spectrum-buying capacity.

An applicant is given eligibility points depending on its EMD, based on which it can target a certain quantum of airwaves in selected spectrum bands. According to analysts, based on the Adani Group’s EMD, it could possibly buy spectrum worth Rs 700 crore.

What does the difference in EMD amounts tell us?

With such a huge gap between the Adani Group’s EMD and that by each of the other three telcos, especially Jio, experts believe that the Adani conglomerate might not directly take them on in the consumer 5G space, at least for now. However, the Adani Group, which has said it is entering the auction to build private 5G networks, could possibly become a competitor of telecom companies in the enterprise solutions vertical, according to analysts.

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ADANI: Since the Adani Group has previously clarified that it has no intention of entering the consumer 5G space and is participating in the spectrum auctions to build captive private networks, analysts tracking the field believe that the company might bid in the 26 GHz millimetre band, which is a high-speed, low-latency band, and thus ideal for private networks. In a report, Credit Suisse said Adani’s low EMD compared to the others “does indicate that its participation in the spectrum auction will largely be limited to the 26GHz band”, which is the “cheapest band for enterprise use cases”.

JIO: Jio, meanwhile, can buy spectrum worth around Rs 1,30,000 crore and could also bid for the premium 700 MHz band, which is best suited for consumer-related applications.

“… we expect Jio to bid ~100-150MHz in 3.5GHz band, 500MHz in 26GHz band and also potentially 5-10MHz in 700MHz band or selectively add to its spectrum holdings in 800MHz and 1800MHz bands,” Credit Suisse said in its report.

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AIRTEL: With an EMD of Rs 5,500 crore, Airtel is expected to restrict its bidding in the 3.5 GHz and 26 GHz band, Credit Suisse said. “Additionally, Airtel could also look to selectively add spectrum in 900MHz and 1800MHz bands in circles such as Delhi, Mumbai, Kolkata, Gujarat, Tamil Nadu, etc.”

VODAFONE: Credit Suisse said Vodafone Idea “will be able to bid for only minimum required spectrum: ~50MHz in 3.5GHz band and 400MHz in 26GHz bands”.

Does it mean Adani is not directly competing against the other telcos?

The Adani Group has previously said it is participating in the auctions only to build private networks for business verticals such as airports, power generation plants, logistics, and ports, among others. While reports by Credit Suisse, Morgan Stanley, Nomura and others reaffirm that the Adani Group might not be competing with the telcos in the consumer 5G space, the conglomerate has not stated categorically that it will deploy these private networks at just its own business verticals.

According to DoT’s rules on setting up private 5G networks that were released last month, entities can lease spectrum from telecom companies to set up their own private networks. Experts believe that this is one potential area where the Adani Group could directly compete against the other three telecom companies — by possibly leasing spectrum to other entities. This, clubbed with the general view that enterprise solutions will primarily drive revenues for telecom companies as far as 5G is concerned, it could mean that the Adani Group is looking at that bigger share of the overall revenue pie.

First published on: 26-07-2022 at 04:30:26 am
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