5G spectrum auction ends; RIL emerges top bidder at Rs 88K crore

Govt gets over Rs 1.5 trn, sells 71% of the spectrum on offer

After seven days of bidding through 40 rounds, 5G spectrum auction has generated revenues of over Rs 1.5 trillion (Rs 150,173 crore to be precise). While 5G was the centrepiece of the auction, the government had put up 72.09 GHz of spectrum across 10 frequency bands on sale.

The first day of the auction saw telcos buying 5G spectrum along with highly-priced 700 MHz airwaves for more than Rs 1.45 trillion. In the remaining six days, the tally inched up marginally as companies got into the 4G play in some circles. On the final day of auctions, the government managed to earn only Rs 43 crore in three rounds of bidding.

The total figure of Rs 1.5 trillion stands out as the highest earning since mobile auctions began in 2010 with 3G. The quantum of spectrum on offer was also the highest. While the government was able to sell 71 per cent of the spectrum on offer in terms of quantity, in value terms it accounted for only around 35 per cent of the total of Rs 4.3 trillion as per the base price.

Reliance Jio was top of the charts, forking out more than double of Bharti Airtel at Rs 88,078 crore for 24,740 MHz of spectrum. But that includes the crucial 700 MHz band (considered key for 5G because of its coverage) apart from 1800 and the 5G bands of 3.3 GHz as well as 26 GHz. With this, they will be the only player to have bought spectrum across bands which are considered key for efficient 5G services globally. 

The company is also going for the advanced standalone 5G network with low latency unlike their rivals who are opting for a non-standalone network. Non-standalone 5G uses a new 5G radio (5G NR) access network overlaid on an existing 4G LTE network core while standalone 5G uses the 5G NR access network on a brand new 5G network core.  

Reliance Jio has spent 69 per cent of its war chest based on the earnest money deposit (EMD). It will have to pay Rs 7,877 crore as its first upfront payment. Airtel has been much more circumspect. It bought 19,876 Mhz of spectrum in various bands including 5G for Rs 43,084 crore. 
 

Unlike Jio, it kept away from 700 MHz, bought 100 MHz of spectrum in the 3.5 band pan India and 800 MHz in the millimetre band.

The company spent Rs 49,500 crore, accounting for 87 per cent of its war chest. Vodafone Idea Ltd spent far lower at only Rs 18,799 crore for 6228 MHz of spectrum. It ended up spending 94 per cent of its war chest as per the EMD.

The new player, Adani Enterprises, spent only Rs 212 crore for 400 MHz in the millimetre band in six circles which include Gujarat, Mumbai, Karnataka, Tamil Nadu, Rajasthan and Andhra Pradesh. It spent a mere 23 per cent of its war chest.              

Speaking at a press conference, communications minister Ashwini Vaishnaw said that based on the bids, the telcos have to pay Rs 13,365 crore as their first instalment in a few days. This includes the interest component for availing the option to stagger the payments over 20 years. “We expect to allocate spectrum by August 10 and then hope telcos will start putting the equipment so that we will have 5G services from October. We have been given to understand that there will be sufficient coverage of 5G in the next two to three years.”

The big telcos appear to have a clear 5G plan. In his first business statement after taking over the reins, Akash Ambani, chairman of Reliance Jio, said: “We will celebrate Azadi ka Amrit Mahotsav with a pan India 5G roll out. Jio is committed to offer world class, affordable 5G and 5G-enabled services. We will provide services, platforms and solutions that will accelerate India’s digital revolution in crucial sectors like education, healthcare, manufacturing, agriculture and e-governance.”

Gopal Vittal, MD and CEO of Bharti Airtel, pointed out: “The spectrum acquisition at the latest auction has been a deliberate strategy to buy the best spectrum assets at a substantially lower relative cost compared to competition.” Analysts say while the per MHz acquisition cost of Airtel is Rs 2.1 crore,  it is Rs 3.5 core for Jio. But they add that if 700 MHz is taken out as Airtel has not bought it, the number comes down to Rs 1.9 crore.            

Explaining the trend of auction, Vaishnaw said that while there were no takers for 600 band because of lack of eco system, it will be attractive in the next two to five years. He elaborated that Reliance Jio bought 10 Mhz across all 22 circles in 700 and is key for 5G because of its huge coverage (8-10 kilometres)  and requirement for lesser towers and it can cover the entire country with it. On the other bands (800 to 2500),  he said telcos’ strategy was to buy spectrum to cover gaps as well as to expand coverage.

The money which the government would get from the auction is far higher than the initial estimates of Rs 70,000 crore which was later upped to over Rs 100,000 crore (Rs 1 trillion). Jio’s decision to buy 700 MHz, which could not be sold in the last two auctions because of a high base price, contributed to the tally.