5G Spectrum Auction Begins: Count down to 5G

5G Spectrum Auction Starts Today: The much-awaited and talked about 5G auctions will begin today. Apart from the three telecom operators, Adani Group is the only new entrant in the fray but its entry is limited to private network solutions and does not cover consumer mobility. Kiran Rathee takes a look at what’s on offer and how the bidding process is expected to pan out

5G Spectrum Auction Begins: Count down to 5G
5G Spectrum Auction: The Bidding Process on Tuesday from 10 am to 6 pm.

India’s Biggest 5G Spectrum Auction Today: How much will the government be able to mop up through the auctions-

In the best-case scenario companies can spend up to 8-9 times of their EMDs. Going by this estimate, the outflow of Jio is likely to be 1.27 trillion, Bharti’s at48,000 crore, and Vodafone Idea’s would be at 20,000 crore. So, the total spend by operators could be around1.95 trillion. This means a large quantum of spectrum will once again remain unsold. More than 60% of spectrum remained unsold in 2016 and March 2021 auctions as operators found reserve price to be too high. Another reason is that there’s plenty of spectrum available now with only three operators so there’s no scarcity value.

Total quantum of spectrum being put up for auctions:

A total of 72 Ghz spectrum across different bands will be up for sale, which at reserve price is worth Rs 4.3 trillion.

Easier payment norms for telcos this time:

In the past auctions, operators had to pay 25%/33%/50% of the total bid amount upfront and the remaining in equal instalments spread over 20 years. This time, there’s no upfront payment required and telcos can spread the entire payment over a 20-year period. This auction onwards telcos won’t have to pay any spectrum usage charge. This could lead to annual cash savings of Rs 700-2,100 crore for the operators.

By when will 5G services be available to consumers

The govt is aiming for the rollout to begin from August 15 onwards. Currently only 7% of the overall smartphone base is 5G-enabled. So, rollout of services will be in staggered manner, first in metro cities and then beyond. In the beginning,operators may possibly charge more for 5G services compared to 4G. Bharti and Jio may emerge as big players in the 5G space while Vodafone Idea, due to its weak financial position, may lag behind.

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