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Rs 96,000 crore telecom 5G spectrum auction to start today: Check details

Reliance Jio, Bharti Airtel, and Vodafone Idea are likely to jointly invest Rs 12,500 crore in spectrum purchases, representing around 13% of the total Rs 96,320 crore worth of airwaves on offer

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Photo: Bloomberg

Rimjhim Singh New Delhi

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India's latest auction of 5G airwaves, valued at over Rs 96,000 crore, is set to commence on Tuesday.

Unlike the last auction in 2022, which saw the government earn a record Rs 1.5 trillion, this event is expected to be more subdued.

A report by The Economic Times quoted experts as saying that the low-key nature of the upcoming sale is due to Reliance Jio, Bharti Airtel, and Vodafone Idea (Vi) already possessing sufficient 5G airwave holdings and a lack of consumer-centric applications.

Analysts cited in the report estimate that these three telecom companies might collectively purchase around Rs 12,500 crore worth of spectrum, which constitutes about 13 per cent of the Rs 96,320 crore worth of airwaves available.

Bharti Airtel and Vodafone Idea will likely only renew their existing holdings in specific frequency bands or acquire minimal additional spectrum. Although Reliance Jio has no upcoming renewals, it may purchase some spectrum in the 1800 MHz band to enhance its portfolio, the report said.

5G spectrum auction: Earnest money deposits (EMDs)

This expectation of restrained bidding is reflected in the modest earnest money deposits (EMDs) submitted by the telecom companies, ranging from Rs 300 crore to Rs 3,000 crore. These deposits are the lowest since the 2014 auction, and 79-86 per cent lower than those in the previous 5G auction of 2022.

Jio has submitted an earnest money deposit (EMD) of Rs 3,000 crore for the upcoming auction, which is nearly three times higher than Bharti Airtel's and ten times more than Vodafone Idea's.

In the previous 5G auction in 2022, Airtel needed to renew airwaves in Uttar Pradesh (East) but encountered a bidding war with both Jio and Vodafone Idea for the 1800 MHz band, resulting in a winning price 76 per cent above the base price. However, except for certain regions, telecom companies are not expected to show significant interest, the report added.

The auction will feature 5G airwaves across eight bands: 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz, 3.3 GHz, and 26 GHz.

Spectrum auction: Payments

The telecom companies can either pay the full amount upfront or opt for instalment payments. If they choose the instalment option, the government is projected to collect Rs 1,200 crore in the first year from the upcoming sale.

Opting to pay the entire amount upfront can help telcos save on interest costs, as the interest rate for deferred payments is higher for the upcoming auction compared to the last one. The interest rate for the 2022 auction was 7.2 per cent, while for the upcoming auction it is 8.65 per cent, the report said.

Bharti Airtel recently settled its outstanding spectrum auction payments to avoid incurring high interest costs.

Experts predict that Airtel will be the biggest spender in the upcoming auction, as the company needs to renew its licences in six circles: Assam, Bihar, Jammu and Kashmir, Odisha, Uttar Pradesh East, and West Bengal. Vodafone Idea is expected to renew its spectrum holdings in West Bengal and Uttar Pradesh West.

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First Published: Jun 25 2024 | 9:35 AM IST

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