Spectrum auction ends with bids worth Rs 77,815 crore, Jio becomes biggest buyer

The 2300 MHz band turned out to be the most sought after with 89.29 percent spectrum being sold. Of 560 MHz spectrum put for auction under the 2300 MHz band, 500 MHz found takers, the Ministry of Communications said in a statement.

In the 800 MHz band, 65 percent of the available spectrum was sold. In the 1800 MHz band, 43 percent of spectrum was sold. In the 900 MHz band, 39 percent of spectrum was sold, and in the 2100 MHz band, 9 percent of spectrum was sold. 

The department of telecommunications (DoT) aimed to raise at least ₹3.92 lakh crore by auctioning the entire spectrum.

There were only three bidders - Airtel, Vi, and Reliance Jio - this year, as against seven bidders during the last spectrum auction in 2016.

The DoT auctioned over 2,308 units of spectrum across the 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz bands.

Bids were received for radio airwaves in the 800MHz, 900MHz, 1,800MHz, 2,100MHz and 2,300MHz bands. Spectrum in the 700MHz and 2,500MHz bands remained unsold.

As widely expected, the 700 MHz band did not find any takers due to its high base price (nearly 2 lakh crore) like the 2016 spectrum auction.

Experts said the 700 MHz airwaves will remain largely unsold as it can be used for the deployment of the 5G technology thus making it the most expensive band.

The telecom secretary indicated that the 700MHz band, which remained unsold, could be used for 5G auction. He further indicated that the unsold spectrum in the 700 and 2,500 MHz will be sent to the Telecom Regulatory Authority of India for a fresh reference.

"700 MHz band went unsold as expected despite a 40-45% reduction in base price over the last auction in 2016. However, we expect the government to further reduce the price of this band and release it for 5G auctions when the telcos may pick up some pockets.

"The band has excellent propagation characteristics (2x and 3x the length of a mid-band spectrum in urban and rural areas, respectively) and can be used in conjunction with mid-band for the launch of 5G. Given the higher number of sites required for 5G, the use of 700 MHZ band can potentially reduce the network capex for telcos by 20-30 percent according to our initial estimates," noted Isha Chaudhary, Director, CRISIL Research.

The telecom secretary said Reliance Jio bought spectrum in 800 MHz, 1800 MHz and 2300MHz bands. Vodafone Idea bid only in 900MHz and 1800 MHz bands, while  Bharti Airtel spread its requirement across 5 bands - 800 MHz,900 MHz, 1800 MHz, 2100 MHz and 2300MHz. 

Commenting on the acquiring pattern of the telcos, Prakash said, “The telcos seemed to have consolidated their positions in the bands in which they were operating and have taken spectrum in the bands in which they felt they had less spectrum. 

Bharti Airtel on March 2 confirmed that it had spent Rs 18,699 crore in the spectrum auction. It confirmed acquiring 355.45 MHz spectrum across Sub GHz, mid band and 2300 MHz bands.

Airtel also confirmed not biding for the 700 MHz airwave band owing to its high reserve price.

Telecom Secretary Anshul Prakash had said with the spectrum auction, the Union government is expecting to generate a revenue of Rs 12,000-13,000 crore in FY21.

“If we exclude the 700 and 2500 MHz bands, the bidding in the rest of the bands represents 60 percent of spectrum put to auction,” he said on March 1.

Having collected nearly ₹77,146 crore, Union communications minister Ravi Shankar Prasad had said on March 1 that the auctions had exceeded the government's estimates of  ₹45,000 crore on day one of the auction.

The auction lasted six rounds, with four rounds of bidding on day 1 and two on day 2.

The spectrum bought by the telcos will be valid for 20 years.

"The auction bids of Rs 77,814 crore exceeded expectations by at least 50 percent owing to higher interest in Sub-GHz band which constitutes over 55 percent of the total bids received. Assuming players opt for deferred payment mode which is usually the case, we expect the total upfront payments to be Rs 27,000-28,000 crore," said Chaudhary.

According to the DOT, the payment is to be made in 10 days post the issue of demand notice which is expected to be released within the next 7-10 days and will remain a key moniterable. Any delay in the release of demand notice would lead to collections slipping to next fiscal impacting government revenues for the current fiscal, she added.

Telcos need to pay upfront 25 percent of spectrum won in the 700 MHz, 800 MHz and 900 MHz bands, and 50 percent of the rest of the bands (1800, 2100, 2300, and 2500 MHz bands). The rest is to be paid in 16 annual instalments after a two-year moratorium.

Spectrum Usage Charges (SUC) for the spectrum acquired in this auction will be payable at the rate of 3% of Adjusted Gross Revenue (AGR) of the licensee, excluding revenue from wireline services, the statement noted.

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