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Explained: As the 5G spectrum auction concludes, who bought what bands and why?

5G auction: How much spectrum was bought by the applicants? How did Jio, Airtel, Vodafone Idea and the Adani Group bid? How competitive was the bidding? What next?

A total of 51.2 GHz of spectrum was sold of the total 72 GHz that was up for grabs – close to 71%.

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.

5G auction: How much spectrum was bought by the applicants?

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 for 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.

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.

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What is the reason behind the auction fetching more cash than estimated?

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 2021, owing to high price compared to other bands.

Before the auction, telecom operators had called for slashing the reserve price of the spectrum bands by as much as 90 per cent in some cases. However, the government finally settled on slashing the base prices by about 40 per cent. In the latest auction, the 600 MHz band saw no takers.

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The 3,300 MHz band saw the highest amount of bids at Rs 80,590 crore.

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 39,270 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.

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.”

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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.

How did Jio, Airtel, Vodafone Idea and Adani Group bid?

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.

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.

Jio’s biggest competitor, Bharti Airtel, has not acquired any spectrum in the 700 MHz band. 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.

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.

How competitive was the bidding?

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Only one spectrum band, the 1800 MHz airwaves, saw the reserve price getting breached during the bidding while all the other frequency bands were sold at base price. 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.

What’s next?

Vaishnaw said that the government will try to allocate the spectrum to the bidders by August 10 and 5G services should start rolling out in the country by October.

First published on: 02-08-2022 at 02:36:23 pm
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