5G auctions: Government may earn up to Rs 1.95 trillion

More than 60% of spectrum remained unsold in the 2016 and March 2021 auctions.

5G auctions: Government may earn up to Rs 1.95 trillion
Adani Group, which was a surprise entrant and is bidding for private network and not consumer mobility, has put in the least at only Rs 100 crore.

The government could mop up a maximum of Rs 1.95 trillion through the spectrum auctions which commence on July 26, if earnest money deposit (EMD) made by telecom operators is any indication.

Since the total quantum of spectrum across different bands being put up for auction is 72 Ghz, which at reserve price is worth Rs 4.3 trillion, in the best case scenario the government will be able to raise only half of the total amount on sale. This means a large quantum of spectrum will once again remain unsold.

More than 60% of spectrum remained unsold in the 2016 and March 2021 auctions.

Based on EMD, only Reliance Jio is likely to bid for the expensive 700 Mhz band, while Bharti Airtel and Vodafone Idea may give it a miss. The entire quantum of 700 Mhz had remained unsold in the previous two auctions.

As reported by FE, Adani Data Networks will only go for 26 Ghz, which is the millimetre band, as that is ideal for private network solutions.

The EMD numbers, which were released by the department of telecommunications on Monday, show that Reliance Jio has deposited the maximum of Rs 14,000 crore, followed by Bharti Airtel which has deposited Rs 5,500 crore, and Vodafone Idea Rs 2,200 crore.

Adani Group, which was a surprise entrant and is bidding for private network and not consumer mobility, has put in the least at only Rs 100 crore. This means that Adani Data Networks’ total spend would be around only Rs 700 crore.

Typically, EMD amounts give a broad indication of players’ appetite, strategy and plan for picking up spectrum in an auction. They also determine the eligibility points through which telecom operators target specific amount of spectrum in a given circle.

However, it is not necessary that operators would bid as per the EMD amount and the actual spend could be lower.

Industry executives said telecom operators can target eight to nine times their respective EMD in the best case scenario. Going by this estimate, the outflow of Jio is likely to be Rs 1.27 trillion, Bharti’s Rs 48,000 crore, and Vodafone Idea’s Rs 20,000 crore.

In April, Telecom Regulatory Authority of India (Trai) had cut the reserve price for 5G spectrum in the 3,300-3,670 MHz by 36% to Rs 317 crore per Mhz. In 2018, when Trai had for the first time recommended the reserve price for this band, it had fixed it at Rs 492 crore per Mhz. Telecom operators who had demanded a 90-95% cut in the reserve price, had expressed their disappointment, saying it continued to be on the higher side.

Since operators would need around 100 Mhz to run an efficient pan-India network, at the reserve price they would have to shell out Rs 31,700 crore for buying this band.

Trai had also fixed the reserve price for the 24.25-28.5 GHz spectrum band, which is referred to as millimetre band, at Rs 6.99 crore per Mhz. Operators would need a minimum of 800 Mhz for a pan-India network so they will have to fork out Rs 5,592 crore. In total, they would have to spend around Rs 37,292 crore on these two bands.

Apart from these two, there’s spectrum in the bands of 600 MHz, 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, and 2300 Mhz, on sale in the upcoming auctions.

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