Muted spectrum auction sees telcos placing bids worth Rs 11,000 cr

The auction of radio waves used for mobile services saw a muted opening on Tuesday, with five rounds attracting bids worth about Rs 11,000 crore from telecom companies.

The government has put over 10,500 Mhz spectrum in eight frequency bands -- 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz, 2,500 MHz, 3,300 MHz and 26 GHz, valued at Rs 96,238 crore at base price, for auction.

Telecom operators placed bids worth Rs 11,000 crore on the first day of the spectrum auction that saw five rounds of bidding, sources said, adding that the auction will resume on Wednesday, going into the sixth round.

Reliance Jio, Bharti Airtel and Vodafone Idea (VIL) are vying for the radio waves crucial for high-speed 5G mobile services in these auctions, which are being held after a gap of nearly two years.

As per the day one spectrum auction report issued by the Department of Telecom, bidding took place mainly in the 900 and 1800 Mhz bands.

The operator also placed bids for the 2100 Mhz band spectrum in three circles.

"Bids in the 900 and 1800 Mhz band seem to be part of telecom operators replenishment strategy," a source said.

Bharti Airtel has spectrum expiring in six circles and VIL in two circles.

According to a JP Morgan report, VIL needs to decongest its existing network over the next couple of quarters, especially by using 900, 1800 and 2100 Mhz spectrum bands.

Telecom expert Parag Kar estimates 1800 Mhz band drew bids worth Rs 6,306.4 crore, 900 Mhz attracted bids worth Rs 4,465 crore and 2100 Mhz saw bids worth Rs 360 crore on Day 1.

There were no bids placed in the rest of the five spectrum bands.

The operator-wise break-up of the bid was not immediately known and will be announced once the auction concludes.

Earlier in the day, as the initial rounds were underway, telecom operators showed interest in four spectrum bands -- 900 MHz, 1800 MHz, 2100 MHz, and 2500 MHz.

"There was activity in four spectrum rounds initially -- 900 MHz, 1,800 MHz, 2,100 MHz, and 2,500 MHz band.

"Spectrum auction entered the fourth round around 3 pm," another source said.

On expected lines, the 10th auction this time around has been low-key as market watchers had anticipated limited bidding, focused primarily on spectrum renewals, and selective sprucing up of radio waves.

During the last auction in 2022 - which turned out to be a seven-day affair - a record over Rs 1.5 lakh crore worth of 5G telecom spectrum was sold, with billionaire Mukesh Ambani's Jio emerging as the top bidder, cornering nearly half of all the airwaves (worth Rs 88,078 crore).

At that time, telecom tycoon Sunil Mittal's Bharti Airtel made a successful bid of Rs 43,084 crore, while Vodafone Idea bought Spectrum for Rs 18,799 crore.

Industry analysts had predicted 2024 bidding to be relatively muted, with low earnest money deposit (EMD) submissions by telcos, reflecting a selective appetite for radio waves.

Analysts expect Bharti to bid for some of its expiring spectrum (it has renewals for 42 Mhz of spectrum in 1800 MHz and 900 MHz band in six circles), while Jio - which has adequate spectrum across 4G and 5G bands - may be more picky and selective, they said.

For the 2024 auction, the EMD submitted by telcos ranged between Rs 300-3000 crore - the lowest since the auctions in 2014 and down a staggering 80 per cent over the previous auction in 2022.

Reliance Jio has deposited the highest earnest money of Rs 3,000 crore for the spectrum auction, which provides the company with the firepower to bid for maximum radiowaves among the three telcos.

Bharti Airtel has submitted an EMD of Rs 1,050 crore and Vodafone Idea (VIL) of Rs 300 crore.

Telecom industry body Cellular Operators Association of India Director General SP Kochhar said the 5G auctions will catalyse the rapid rollout of 5G services across the country, leading to enhanced coverage and vastly improved connectivity.

COAI counts Reliance Jio, Bharti Airtel and Vodafone Idea as its members.

"By bridging the digital divide, the 5G spectrum auctions will ensure that even the most remote areas of our country gain access to high-speed internet, thereby fostering greater economic opportunities and social advancement.

"The auctions also symbolise our commitment to 'Viksit Bharat', and we are confident that the outcomes of these auctions will lay a strong foundation for a prosperous and digitally empowered India," Kochhar said.

As per Kar's analysis, Jio may be keen on bidding for 800 Mhz band only, which may lead to an estimated cash flow of Rs 18,000 crore.

"Bharti's targeted approach in the upcoming auction is aimed at consolidating and enhancing its spectrum efficiency.

"The total outflow for Bharti will be Rs 11,512 crore at the reserve price," Kar said in his blog.