Low-key bidding likely at spectrum auctions on March 1

Bands valued at ₹3.92 lakh cr at stake; 5G airwaves not on sale

February 28, 2021 05:46 pm | Updated 05:46 pm IST - NEW DELHI

Reliance Jio has submitted an earnest money deposit (EMD) of ₹10,000 crore

Reliance Jio has submitted an earnest money deposit (EMD) of ₹10,000 crore

While the much-awaited telecom spectrum auctions kick-off from Monday, analysts do not anticipate large scale bidding and expect operators to bid conservatively for minimum quantities with a focus on renewal of expiry spectrum.

A total of 2251.25 MHz of airwaves, across 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz frequency bands, with a total value of ₹3.92 lakh crore at reserve price, will be put up for bidding. The 5G airwaves have not been put up for bidding.

In a recent note, IIFL Securities said it sees only 24% of total spectrum getting sold.

“Telcos will likely bid conservatively for minimum quantities, needed to satisfy the immediate 2-3-quarter capacity requirement, and await prices of regular bands to be cut in subsequent auctions as well as wait for 5G spectrum... We do not see any bids in the 700, 1800, 2100 and 2500 MHz bands,” the note said.

In the last spectrum auctions, which were held in 2016, about 40% of the 2,355 MHz of spectrum (worth ₹5.6 lakh crore) put on auction was sold, generating ₹65,789 crore revenue for the government. There were no takers for spectrum in 700 MHz due to high reserve prices as well as for the 900 Mhz band.

The three private operators — Bharti Airtel, Reliance Jio and Vodafone Idea — have submitted earnest money deposit (EMD) of ₹3,000 crore, ₹10,000 crore and ₹475 crore, respectively. According to spectrum auction rules, a firm can bid for spectrum only as per eligibility point allocated based on EMD submitted by it.

As per ICICI Securities, operators can buy spectrum worth 5-7 times their EMD, meaning Bharti Airtel’s spectrum payout could be capped at about ₹15,000-21,000 crore, Reliance Jio’s at about ₹50,000-70,000 crore and for Vodafone Idea at about ₹2,400-3,300 crore.

Likewise, Jefferies in its research note pointed out that with the 5G spectrum not being auctioned, telcos will focus on 2021/24 renewals and boosting capacity by buying 1800/2100/2300MHz bands. “We don't expect operators to bid for 700MHz band due to its high price as well as ample availability of spectrum in 800MHz,” it said.

As per the government, successful bidders may pay entire bid amount in one go or may exercise the option to pay a certain amount (25% for spectrum won in 700 MHz, 800 MHz, 900 MHz bands or 50% for spectrum won in 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz bands) upfront and remaining amount in a maximum up to 16 equated annual instalments, after a moratorium of two years.

In addition to the bid amount, successful bidders will also have to pay 3% of the Adjusted Gross Revenue (AGR) excluding wireline services as spectrum usage charges for the spectrum won through this auction.

Top News Today

Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in


Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.