Three weeks from now the Department of Telecommunications is set to conduct a spectrum auction where airwaves across 8 bands will be put up for sale. Three private telcos will battle it out to renew their expiring spectrum or to top-up their existing holding across various spectrum bands. Without going into too much technicality let’s answer the basic auction-related questions in a nutshell for easy understanding.
When is the spectrum auction starting and how long will it last?
The auction is set to begin on 25th June (earlier it was supposed to commence on 20th May and then 6th June but on account of the ongoing Lok Sabha elections it has been rescheduled to 25th June). The duration of an auction is variable and depends on the demand of the spectrum in comparison to availability but this time it is expected to last for only a couple of days.
Which operators will be participating in the auction?
According to the final list of bidders released by the DoT, 3 operators will be participating. The names of the operators are as follows:
- M/s Bharti Airtel Ltd.
- M/s Vodafone Idea Ltd.
- M/s Reliance Jio Infocomm Ltd.
What’s the total quantum of spectrum put up for sale and the base price?
The government will put up a total of 10,523.15 MHz of airwaves across 8 bands worth Rs 96,317.65 crore for sale in the upcoming auction.
Which operator has deposited the highest Earnest money for the auction?
Earnest money deposit is the amount deposited by telcos to the DoT which makes them eligible to place bids in the auction. Reliance Jio has paid the highest EMD of Rs 3000 crore, followed by Bharti Airtel, which deposited Rs 1050 crore, and Vodafone Idea, which deposited Rs 300 crore.
In which bands is Spectrum being put up for auction?
Spectrum is being auctioned in 800 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz, 3300 MHz and 26 GHz bands. For the circle-wise availability of spectrum in these bands, please refer to the spectrum holding chart 2024.
What are the block sizes for the various spectrum bands?
The 800 MHz band will be auctioned in a block size of 1.25 MHz, The 900 MHz and 1800 MHz bands will be auctioned in a block size of 0.2 MHz. The 2100 MHz band will be auctioned in a block size of 5 MHz. The 2300 MHz and 2500 MHz and 3300 MHz bands will be auctioned in a block size of 10 MHz whereas the 26 GHz band will be auctioned in a block size of 50 MHz.
What will be the validity of the spectrum won in this auction?
The spectrum won in this auction will be valid for 20 years, athough the operator can choose to share the spectrum with another operator after one year or sell it to another operator after two years of winning it in the auction. An operator can also decide to surrender the spectrum to DoT after 10 years of winning it in the auction, provided all instalments have been paid up to the surrender and there will be no refunds for any advance payments.
What are the expected bidding strategies of the 3 operators in the auction?
Bharti Airtel:
According to IIFL securities, Bharti Airtel has renewals for 42MHz of spectrum in 1800MHz and 900MHz band in six circles namely Assam, Bihar, J&K, Odisha, UP East and West Bengal. In these six circles, they expect it to bid for 900MHz. In Kerala, Bharti may bid for 0.4MHz to take its total 900MHz holdings to 5MHz. In Andhra Pradesh, Karnataka, Rajasthan and Tamil Nadu, it may be bid for 900MHz to take its holdings to 10MHz. In Uttar Pradesh West, where it holds no 900MHz, they expect it to bid for 5MHz. In the 1800MHz band, Bharti may bid for 1.8MHz in West Bengal taking its holding to 10MHz. In the 2300MHz band, Bharti may use the current auction to take its total holdings to 1x40MHz in all six circles with supply.
Reliance Jio:
As per analysts, Jio has adequate spectrum across 4G (800/1800/2300MHz bands) and 5G (700/3300MHz/26GHz) bands, hence its participation in the auction is likely to be limited despite the highest EMD. According to Jefferies Jio may increase its spectrum holding in some circles in the 800MHz band and increase its holdings in the 3300MHz bands to 130MHz across all circles, which could lead to a maximum spectrum spend of Rs 120 billion. This is 4x of its EMD – in line with the 2-6x ratio of its actual spend and the EMD submitted in previous auctions.
Vodafone Idea:
According to IIFL securities Vodafone Idea has renewals for 12MHz of spectrum in the 1800MHz and 900MHz band in two circles. They expect the telco to pick up 5MHz and 4.6MHz in the 900 Mhz band in UP West and Bengal respectively. Given that Vodafone Idea has ample spectrum in renewal circles in the 1800MHz band, it may not renew its spectrum in the 1800MHz band; however, its renewal in the 900MHz band is likely, especially in the West Bengal circle, Jefferies said.
Department of Telecom (DoT) on Tuesday postponed the spectrum auction by 19 days to June 25
Correction needed in block size where 2100, 2300, 3300 written which is 2300, 2500, 3300.
Spectrum aution are becoming very boring. Everyone having plenty of spectrum it just expiring spectrum renewal
Thanks, it was a typing error, it has been corrected.
Yes for Vi it will only be renewal of spectrum, Airtel partly renewal partly top-up of new spectrum and Jio only top-up mainly in 3300 MHz band but they may consider bulking up 1800 MHz holding since their mid band holding is weaker compared to the other two, it’s unlikely they go for a new band but if they pick 2100 MHz the band will have a lot of availability in the next 6 years when it comes up for renewal.
Since Vi bought 10 MHz B41 in 2 circles in last auction. I want Vi to buy 10 MHz B41 in Bihar circle also as they have least spectrum here.
Jio can buy 10 MHz Band n3 easily in circles like Delhi, Mumbai, Kolkata, Haryana, Kerela, U.P east, West Bengal, Bihar and Himachal Pradesh as there is enough spectrum up for sale.
I expect Airtel to get atleast 10 MHz sub-GHz ( 850/900 MHz ) in all the circles since Jio is holding 20-25 MHz in that in all circles ( but seems highly unlikely )