5G Spectrum Auction Begins: Reliance Jio, Bharti Airtel, and Vodafone Idea Are The Three Major Bidders
From 10 a.m. today, the Department of Telecommunications has started the auction of 10,500 megahertz of mobile service radio waves in eight bands to telecom giants. Frequencies on auction across the spectrum include 900 MHz, 800 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz, 2,500 MHz, 3,300 MHz, and the 26 gigahertz (GHz) bands. Big private sector giants, which include Bharti Airtel, Vodafone Idea, and Reliance Jio, are bidding and are expected to spend around Rs 15,000 crore on their purchases. In 2010, the process of auctioning began. This is the 10th spectrum auction. It is also the first ever auction for the new Union Telecom Minister, Jyotiraditya Scindia.
The auction will see participation from three bidders.
Big private players, including Reliance Jio, Bharti Airtel, and Vodafone Idea, are competing in this auction. The highest earnest money of Rs 3,000 crore is deposited by Reliance Jio, allowing the telecom giant to bid for the largest amount of radio waves. Rs 1,050 has been deposited by Bharti Airtel, while Vodafone Idea has submitted Rs 300 crore as per the pre-qualified bidder details from the department of telecommunications. Telecom giant Vodafone Idea is focusing on strategic purchases, particularly in the 26 GHz band, to decrease its spectrum usage charges.The 3300 MHz band is expected to attract significant interest from Reliance Jio and Bharti Airtel because it is crucial for offering 5G services with minimal capital expenses.
Mock auctions were conducted
Mock auctions were organized on June 3, 14, and 15 to help the bidders get used to the e-auction platform. Following the mock auctions on June 24, 2024, at 9:00 a.m., the auction catalog was published to ensure that all bid information was accurate. From this auction, the government aims to collect Rs. 10,000 crore. As per the predictions by the analysts, the spectrum prices will likely be close to the reserve prices because of limited extra demand.
The spectrum purchased in this auction will be valid for 20 years. Telecom giants can share, lease, trade, or surrender the spectrum after 10 years. The telecom companies can choose to pay the full amount upfront to avoid paying interest. The interest rate for deferred payments in this auction is 8.65 percent, which is higher than the rate in the auction in 2022. Payment options for the companies include partial payments with corresponding moratoriums or 20-year installments, with the first installment due 10 days after the auction. There is no penalty for prepayment.
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For the recent spectrum auction, the Department of Telecommunications decided not to include the 600 MHz and 700 MHz bands. The department also increased the minimum prices by 12 percent for the 3,300 MHz band and by 8.9 percent for the 26 GHz band.Analysts expect strong competition among Reliance Jio, Bharti Airtel Ltd., and Vodafone Idea Ltd. for the spectrum. They predicted that these companies would collectively spend around Rs 15,000 crore on bands supporting both 4G and 5G services.
