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5G Auction In India Tomorrow

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5G Auction In India Tomorrow
25 Jul 2022
5 min read

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News Synopsis

Reliance Jio Infocomm Ltd, Bharti Airtel Ltd and Vodafone Idea Ltd are all set to battle for bandwidths to roll out 5G networks beginning tomorrow, when the government puts spectrum worth Rs4.3 trillion available for sale. The auction for spectrum will bring the new entry Adani Data Networks pick up spectrum to launch its own captive network and set up networks for enterprise.

Four companies provided earnest money deposits of Rs 21,800 crore, which will allow them to compete on the spectrum for Rs2.11 trillion, if they are fully used.

Experts in the field said that telecom service providers aren't likely to offer a competitive bid across the 10 bands. 5G bands could see sales at base prices, mostly because of the reduction of 39% in the base price of spectrum from the telecom regulator, and the simple payment conditions of equal installments in 20 installments established by the government.

"We believe spectrum will be sold at prices that are close to the reserve and expect demand to be between $13-20 billion, versus the $54 billion of spectrum auctioned off," said analysts at Jefferies in their note.

A significant reduction in terms of payments overall will be a result of the elimination of charges for spectrum usage (SUC) to auctions.

The analysts from IIFL Securities expect spectrum worth Rs1.14 trillion to be acquired through Reliance Jio, Bharti Airtel and Vodafone Idea in the 3.5GHz 26GHz, 900MHz, and 850MHz bands.

It is believed that the 3.5GHz band is likely to become the one most sought-after among the carriers, with more than 330 airwaves can be purchased at a price of Rs317 crore for each unit. India's top operator Reliance Jio is likely to gain 100MHz in this band and number two Bharti Airtel is expected to gain 50-80MHz from important circles. Vodafone Idea is likely to gain around 40MHz in its powerful areas comprising Mumbai, Delhi, Gujarat and Kerala.

"We are now expecting telcos to offer competitive amounts of this band particularly as they don't be willing to take the chance of holding large amounts of spectra to auctions in the future and an opportunity for involvement from the Adani Group," said analysts from IIFL Securities in a note.

They anticipate Jio to offer the entire 850MHz spectrum offer in order to extend its advantage in the low-frequency spectrum over its competitors. Airtel along with Vodafone Idea are expected to take advantage of the 900MHz bands within areas where they will need to expand their capacities in order for 4G support.

The band with 26GHz frequency is likely to be the one with the greatest participation and all three carriers anticipated to use up to the limit of maximum allowable limits. Analysts believe Bharti Airtel and Reliance Jio to acquire more than 1000MHz in the band. Vodafone Idea may take in half of the circles.

Adani Group is likely to receive 100MHz of the 26GHz spectrum across India according to analysts, based on the EMD of 100 crore. Other options include 400MHz within Delhi as well as Mumbai as well as the identical number of frequencies in Gujarat, Maharastra, Tamil Nadu and Karnataka as per IIFL Securities' estimates.

The company has announced its intention to take part in the auctions of spectrum, saying that it will offer secure network solutions as well as enhanced security for airports ports and power generation, logistics transmission, distribution and other manufacturing operations.

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