The latest auction of fourth-generation (4G) telecom spectrum held this month attracted bids worth Rs 77,814.80 crore, 18 percent more than the previous sale of airwaves to mobile phone service providers in October 2016.
Winners of the auction, held on March 1-2, acquired 855.60 megahertz (MHz), which is 37 percent of the offered 2308.80 MHz by volume, and 19 percent by value. In 2016, Of the 2,354.75MHz auctioned, about 41 percent or 964.80MHz was acquired in terms of quantity and 12 percent or Rs 65,789 crore by value.
Only three companies participated in latest auction, compared with seven bidders in 2016.
This year, Reliance Jio emerged as the biggest bidder, acquiring 488.35 MHz for Rs 57,122.65 crore, followed by Bharti Airtel which took 355.45 MHz for Rs 18,698.75 crore, and Vodafone Idea with 11.80 MHz for Rs 1,993.40 crore.
Spectrums are invisible radio frequencies that transmit wireless signals to our devices, that help us make calls through smartphones and browse the internet. These are split into several bands. These are low-band spectrum up to 3GHz, mid-band between 3GHz and 24GHz, and high-band that is 24GHz and more.
In 2021, the government auctioned spectrum across seven bands -- 700 MHz, 800MHz, 900MHz, 1,800MHz, 2,100MHz, 2,300MHz, and 2,500MHz. Participants did not bid for 700 MHz and 2500 MHz bands.
Analysts said Bharti Airtel and Jio did well to acquire spectrum that will improve their networks.
“Bharti Airtel has taken the lead on overall spectrum holding by judiciously covering the gaps in coverage as well as capacity in 19 out of 22 circles,” states a report by Kotak Institutional Equities. “Jio has expanded its own subGHz footprint meaningfully to provide for the expiring bandwidth and enhanced its capacity to uniform levels in 1800/2300 MHz bands across all circles. VIL has acquired modest capacity in five circles only,” the report notes.
“The spectrum additions will allow Bharti and Jio to enhance their user experience further, compounding woes for VIL,” the report highlights further.
India has suffered from a chronic shortage of spectrum which was dealt decisively through the mega auction of spectrum held in October 2016, the Department of Telecommunicactions Annual report 2016-17, had stated. The spectrum sold during the auction of 2016 was higher compared to the cumulatively (929MHz) sale reported during the four auctions held between 2012 and 2015, the report highlighted.
The spectrum assigned to the successful bidders in 2021 will be valid for 20 years. The Spectrum Usage Charges for the spectrum acquired in this auction will be payable at the rate of 3% of Adjusted Gross Revenue of the licensee, excluding revenue from wireline services.
“Indian telcos’ spectrum acquisition can be accommodated in their current ratings, particularly amid the stabilizing competitive environment,” said Sweta Patodia, Analyst, Corporate Finance Group, Moody’s Investors Service. “Some have recently raised funds while others have large cash holdings to support the acquisitions. The spectrum renewals will help incumbents protect their market positions while additional bandwidth purchases will drive improved network coverage.”
Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.
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