Wednesday, 21 April 2021

India’s spectrum auction: 4G consolidates while 5G waits

by Harry Baldock, Total Telecom
Wednesday 03 March 21

Reliance Jio was the largest bidder, acquiring almost $8 billion-worth of spectrum in the auction

After much delay, India’s latest spectrum auction is finally complete, raising a total of around $11 billion in just two days. The auction for airwaves in the 700, 800, 900, 1,800, 2,100, 2,300, and 2,500 MHz bands began at the start of the month, with a total of 2,251 MHz of spectrum available for India's telcos. Heading into this auction, Reliance Jio was expected to bid more aggressively compared to its rivals…

After much delay, India’s latest spectrum auction is finally complete, raising a total of around $11 billion in just two days.

The auction for airwaves in the 700, 800, 900, 1,800, 2,100, 2,300, and 2,500 MHz bands began at the start of the month, with a total of 2,251 MHz of spectrum available for India's telcos.

Heading into this auction, Reliance Jio was expected to bid more aggressively compared to its rivals, at least in part due to the licences for 800 MHz spectrum that it shares with RCOM expiring in July; RCOM itself filed for bankruptcy in 2019. Equally, the auction comes at a time where Reliance Jio is far more flush with cash than its rivals, especially Vodafone Idea, which is struggling under the weight of huge debts.

The results of the auction well reflect this prediction. Jio bought airwaves worth $7.8 billion, while Bharti Airtel purchased $2.6 billion and Vodafone Idea only around $270,000.

Jio purchased 488.35 MHz of spectrum in total, primarily renewing the aforementioned 800 MHz spectrum licences as well as gaining spectrum in the 1,800 MHz and 2,300 MHz bands. Airtel gained 355.45 MHz across the 800, 9,00, 1,800, 2,100 and 2,300 MHz bands, while Vodafone Idea gained just 11.8 MHz of spectrum in the 900 MHz and 1,800 MHz bands.

There were notably no buyers in the 700 MH band due to the high reserve price, making this the second time that the government had priced out the operators from purchasing such spectrum, having failed to entice them to do so back in 2016. The 2,500 MHz band was also entirely avoided, while just 15 MHz of the 175 MHz available in the 2,100 MHz band was sold.

In total, only around 60% of the spectrum available was actually sold. Overall, the bidding matched the industry’s expectations, with the high reserve price and the substantial debt of the industry resulting in the operators mostly consolidating their positions in 4G.

Nonetheless, India’s Telecom Secretary Anshu Prakash said that the auction exceeded the government’s expectations “given the Covid scenario and other stress situations the sector is facing”. The funds will come as a timely boost to the government’s bank account at a time when it is looking to reinvigorate the economy after the coronavirus pandemic.

As for 5G, it seems that the India will have to wait just a little longer. While it is possible that more 5G frequencies may be put up for auction later in the year, the economic situation surrounding the industry and the government’s refusal to budge on the high reserve prices makes it unlikely, at least for now. 

 

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