New Delhi: India’s biggest-ever auction of spectrum that carries telephone and internet data signals, began on Tuesday with a total of 72 GHz (gigahertz) of 5G airwaves worth Rs 4.3 lakh crore on offer.
Billionaire Mukesh Ambani’s Reliance Jio, Sunil Mittal-led Bharti Airtel, Vodafone Idea and a unit of billionaire Gautam Adani’s flagship Adani Enterprises are in the race to bid for 5G spectrum, that offers ultra-high speeds (about 10 times faster than 4G), lag-free connectivity, and can enable billions of connected devices to share data in real-time.
In addition to powering ultra-low latency connections, which allow downloading full-length high-quality video or movie to a mobile device in a matter of seconds (even in crowded areas), Fifth Generation or 5G would enable solutions such as e-health, connected vehicles, more immersive augmented reality and metaverse experiences, life-saving use cases, and advanced mobile cloud gaming among others.
The auction is being held for spectrum in various low (600 MHz, 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz), mid (3300 MHz) and high (26 GHz) frequency bands.
The bidding which started at 1000 hrs will continue till 1800 hrs and will carry over into the next day, if there exists a demand for spectrum and bidders are putting in bids.
The number of days the auction ultimately stretches to will depend on the actual demand for radio waves and the strategy of individual bidders, although the broad industry consensus is that it may last up to two days.
The department expects Rs 70,000 crore to Rs 1,00,000 crore from the 5G auctions that would ring in new-age offerings and business models, and enable ultra-high speeds — about 10 times faster than 4G. Reliance Jio, Bharti Airtel, Vodafone Idea and a unit of billionaire Gautam Adani’s flagship Adani Enterprises are set to participate in the 5G auctions.
The industry expects spectrum to be sold near the reserve prices, and the bidding to last about two days. At the reserve prices for the various bands, 72 GHz of radiowaves would be worth Rs 4.3 lakh crore.
“Operators will bid for 5G networks, reducing SUC (Spectrum Usage Charges) rates and enhancing existing spectrum bands, resulting in demand mainly led by 3.3 GHz/26GHz spectrum bands,” brokerage firm Jefferies said in a note last week. Jio, it is expected, will lead the spends, followed by Bharti Airtel while analysts see limited participation from Vodafone Idea and Adani Group.
Market watchers do not anticipate an intense or aggressive bidding given the abundance of spectrum and only four participants being in the race.
Mukesh Ambani’s Reliance Jio has made a Rs 14,000 crore Earnest Money Deposit (EMD) while rival Adani group made a modest Rs 100 crore deposit recently. EMD itself is reflective of the quantity of airwaves a company can bid for in the auction.
While EMD suggests that Jio, the nation’s largest telecom company by subscribers, may be bidding very aggressively in the upcoming auctions, Adani Group may be looking to buy the bare minimum spectrum needed to set up a private network.
EMD of all the four applicants seeking 5G radiowaves this time adds up to Rs 21,800 crore, a level substantially higher than Rs 13,475 crore deposited in the 2021 auction when three players were in the race.
According to information released by the department on July 18 as part of the list of pre-qualified bidders, Reliance Jio has submitted an EMD of Rs 14,000 crore, the highest among the four players in fray for the spectrum.
The EMD amount of Adani Data Networks stands at Rs 100 crore, the amount itself indicating a muted and limited spectrum demand from its side.
Earlier this month, billionaire Gautam Adani’s group confirmed it would in the race to acquire spectrum, which it said would be used to create a private network to support its businesses from airports to power as well as data centres.
Adani Group has made it clear that its intention is not to be in the consumer mobility space. For the upcoming auction, Sunil Mittal-led Bharti Airtel had put in Rs 5,500 crore as EMD while for Vodafone Idea the amount stands at Rs 2,200 crore.
Typically, EMD amounts give an indication of the players’ appetite, strategy and plan for picking up spectrum in an auction. It also determines the eligibility points, through which telcos target specific amounts of spectrum in various circles.
Telcos have the ability to go after radiowaves worth up to 7-8 times the EMD amounts submitted by them, although players do tend to keep headroom for manoeuvring and flexibility, based on how auction proceeds and the strategy adopted by rivals.