Telcos Bid Worth Over Rs. 77,000 Crores on Day 1 of Spectrum Auction
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Telcos Bid Worth Over Rs. 77,000 Crores on Day 1 of Spectrum Auction

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Day One of the spectrum auction is done with bids worth over Rs. 77,000 crores in four distinct rounds from participating bidders, namely Bharti Airtel, Vodafone Idea, and Reliance Jio. The latest spectrum auction by the government comes five years after the last auction, which took place in 2016. Instead of bringing airwaves for 5G networks, the government decided to place the auction for 4G networks — specifically in 700MHz, 800MHz, 900MHz, 1800MHz, 2100MHz, 2300MHz, and 2500MHz bands.

Exceeding pre-bid estimates of Rs. 45,000 crores, the government attracted provisional winning bids of Rs. 77,146 crores in total during the first day of the spectrum auction 2021. As much as 2308.80MHz spectrum is being put up for bidding, of which bids for 849.20MHz — or over 36 percent of the total spectrum — were received on the first day.

Nearly 65 percent of the 800MHz and 89 percent of the 2300MHz spectrum were sold on the first day of the auction, as per an official press release. The government was also able to sell 38 percent of the airwaves offered in the 900MHz, 41 percent in the 1800MHz, and nine percent in the 2100MHz band. However, the participating telcos didn’t show any interest in the 700MHz and 2500MHz bands on day one of the spectrum auction 2021.

The Ministry of Communications and Information Technology said in a press statement that excluding spectrum in 700MHz and 2500MHz bands, the total bids received so far in the auction stand at almost 60 percent of the available spectrum.

Although actual details will be available upon the conclusion of the spectrum auction, Reliance Jio, which had made the highest earnest money deposit (EMD) of Rs. 10,000 crores, is speculated to be a leading bidder for the 800MHz spectrum. The Mumbai-based telco majorly requires the airwaves for its 4G networks as the spectrum it acquired from Reliance Communications is expiring.

Airtel had paid Rs. 3,000 crores in EMD and is expected to use the latest spectrum auction to acquire the airwaves it needs to strengthen its 4G connectivity in the country. However, Vodafone Idea, which operates through its Vi brand, had paid Rs. 475 crores and is not likely to get much from the latest auction.

The amount of EMD that participants pay indicates their interest as well as the ability to acquire the airwaves during the auction. Higher payment usually translates to higher chances of obtaining any certain spectrum.

Spectrum assigned to the successful bidders will be valid for 20 years, the government said in the statement.

Telecom operators participating in the spectrum auction 2021, which is taking place online, will be required to pay 25 percent of the final bid amount as upfront payment in 700MHz, 800MHz, and 900MHz bands. In the rest of the bands, bidders will have to make 50 percent of the final bid amount upfront. The balance amount will be payable in 16 equated annual instalments after a moratorium of two years.

The spectrum auction 2021 is expected to be one of the shortest auctions; it could be concluded on Tuesday itself. Reliance Jio is likely to continue to bid for multiple bands alongside opening the account for the 700MHz band to improve internal coverage.

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