5G spectrum auction: Indian govt receives record bids on Day 1

INTERNATIONAL DESK: The government of India has received record bids of ₹1.45 lakh crore after four rounds on Day 1 of India’s first-ever 5G spectrum auction. The crucial, albeit pricey, 700 MHz band saw bidding for the first time, along with strong interest in the mid-band (3.3-3.67 GHz) and high-band (26 GHz) airwaves. All bids were at base price.

All three private telcos – Reliance Jio, Bharti Airtel NSE -1.34 % and Vodafone Idea NSE -1.13 % – are said to have bid for mid- and high-band airwaves as they set the stage to launch services which can offer 10 times higher mobile internet speeds than 4G, industry executives and government officials said. New entrant Adani Data Networks, a unit of the diversified Adani Group, is expected to have put in bids only for the high band, also known as the millimetre wave (mmWave), for use in its captive networks.

There were bids for two slots of 700 MHz band pan-India, according to the telecom department’s report for the first day of sale. Jio, which put in the highest pre-auction deposit, may have bid for both the slots of 5 MHz each, said an industry executive.

A minimum 10 MHz is needed for optimum 5G services on the band, said the executive who is tracking the bidding trends. The band had gone unsold in the last two auctions, owing to what the telcos said was high base price. The rate was cut by 40% this time to Rs 3,927 crore for a unit.

“We had four rounds today and have seen good participation from all bidders. We have crossed the previous revenue record (from auctions) at around Rs 1.45 lakh crore so far (from this year’s auction),” telecom minister Ashwini Vaishnaw told reporters Tuesday, at the end of bidding for the day. “We expect the auctions to be completed by tomorrow (Wednesday.)”

The previous record for auction proceeds was set in 2015 when the government raised Rs 1.09 lakh crore from the sale of 4G airwaves.

Jio’s estimated auction spend is likely to exceed Rs 70,000 crore while Airtel’s spend could be in the Rs 45,000-50,000 crore range, said an industry expert. Vodafone Idea’s total spectrum outlay is estimated at around Rs 17,000-20,000 crore, and Adani’s is estimated at Rs 800 crore-1,000 crore.

Mails sent to all the bidders remained unanswered till the time of going to press.

In this year’s auction, the government has offered 72 GHz of airwaves for 20 years across 10 5G bands worth Rs 4.3 lakh crore at reserve prices. On offer are low-band airwaves (600 MHz, 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz), mid-band or C-band (3.3-3.67 GHz), and high band (26 GHz).

“All the important bands – 700 MHz, the C-band (3.3-3.6GHz), and the mmWave (26 GHz) – have seen interest (by bidders),” Vaishnaw said. He added that the response shows that industry has recovered from its difficult times.

Data on the telecom department website showed that all bids, including some minor bidding for bands such as 900 MHz, 1800 MHz, 2100 MHz and 2500 MHz, came in at the base price. That was mainly because of the ample spectrum on offer along with the fact that there were two major bidders in Airtel NSE -1.34 % and Jio, with cash-strapped Vodafone Idea bidding for limited 5G airwaves in its 17 priority areas, say experts.

The 600 MHz, on offer for the first time, 800 MHz and 2300 MHz bands did not attract any bids on the first day.

An industry executive, tracking the bidding patterns, said that the C-band may have attracted bids worth over Rs 78,500 crore, while the high band would have netted over Rs 14,000 crore and the 700 MHz band, over Rs 39,000 crore. Among others, the 1800 MHz band may have got bids worth over Rs 8,000 crore, 2100 MHz may have received bids worth nearly Rs 2,700 crore and the 900 MHz band, around Rs 350 crore.

“We shall complete the spectrum allocation process by August 15 so that the industry can be ready to launch 5G services. After that, telcos will work on installing the devices and target service launch by September-October,” the minister said.

He added that by the end of 2022, Indian consumers will be able to experience 5G in multiple cities, if they so wish.

“The tariff for 5G (services) will be decided by the industry, so we shall have to wait and watch,” Vaishnaw said. Industry watchers expect telcos to offer 5G services at a premium of 10-15% initially, before bringing them on par with 4G services over time as adoption widens.

The Bharti Airtel stock rose 0.83% to end at Rs 683.80 on the BSE while Vodafone Idea lost 1.01% to close at Rs 8.83. Reliance Industries NSE -0.09 %, the parent of Reliance NSE -0.09 % Jio, closed flat at Rs 2,420.50.

“The first day of the spectrum auction is in line with expectations, particularly for 3300 MHz and 26 GHz bands. It clearly highlights that the coveted 5G spectrum is much in demand,” said Prashant Singhal, EY Global TMT Emerging Markets Leader.

He added that bidding in the 700 MHz band was surprising, considering the spectrum price. But it reflected the need to provide pan-India coverage for 5G, especially in rural areas.

“There is no excess demand in any of the bands. If the trend continues, then bidding is expected to be over as soon as 100% activity is reached (from 90% at end of day 1).”

A senior sector analyst said that the bidding pattern suggests all three telcos have selectively topped up in the 1800 MHz band in key markets, while Vodafone Idea is the sole bidder for 2500 MHz in Andhra Pradesh.

He added that both Airtel and Vodafone Idea could have also bid for 900 MHz spectrum in Assam and J&K while airwaves in the 2100 MHz band in Gujarat and Rajasthan may have been targeted by Vodafone Idea.

The government had mopped up Rs 77,814 crore from the last spectrum sale in March 2021, selling 37% of the over 2,300 units of airwaves across seven bands on sale. In the October 2016 sale, its collection at Rs 65,789 crore was even less. (The Economic Times)