India’s 5G Spectrum Auction to Begin Today; Here’s What to Expect

The upcoming 5G services have the potential to create new age businesses, generate additional revenue for enterprises and provide employment arising from the deployment of innovative use-cases and technologies. The 5G services will be rolled out in 13 major cities as part of the first phase.

New Delhi: The Indian telecom industry is all set to begin the 5G spectrum auction on Tuesday with four players, including Reliance Jio and Bharti Airtel, Vodafone Idea, and newcomer Adani Data Networks bidding for 72 GHz of radiowaves worth Rs 4.3 lakh crore on offer. The bidding process is scheduled to start from 10 am and go on till 6 pm on July 26.

The number of days of the auction will depend on the actual demand for radiowaves and the strategy of individual bidders, sources in the Department of Telecom said.

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. 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. The auction will be 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.

“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.

What to Expect from the Auction?

It is expected that the Mid and High band spectrum will be utilised by Telecom Service Providers to roll-out of 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.

The upcoming 5G services have the potential to create new age businesses, generate additional revenue for enterprises and provide employment arising from the deployment of innovative use-cases and technologies. The 5G services will be rolled out in 13 major cities as part of the first phase. These include Mumbai, Bengaluru, Delhi, Gurugram, Kolkata, Lucknow, Pune, Chennai, Gandhinagar, Hyderabad, Jamnagar, Ahmedabad and Chandigarh. Many more cities and rural areas will be added to the list eventually.

Who is spending what for the 5G Sale?

Mukhesh Ambani’s Jio is expected to lead the spending, followed by Bharti Airtel while analysts see limited participation from Vodafone Idea and Adani Group. 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.

Market watchers do not anticipate an intense or aggressive bidding given the abundance of spectrum and only four participants being in the race. 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.