5G Spectrum Auction begins in India: Key Highlights, Successful Bidders, Govt. Expectations

India’s biggest 5G Spectrum auction for 72 GHz of 5G airwaves worth 4.3 Lacs INR has started today. The bidding auction started at 10 am on 22 July and will continue till 6 PM, as reported by PTI (Press Trust of India).   

Currently, everyone is eyeing the ongoing auction and people are curious about who will win the rights for the bids. Reportedly, four major players in India, Reliance Jio, Bharti Airtel, Vodafone Idea, and a unit of billionaire Gautam Adani’s flagship Adani Enterprises are participating in the race to bid for the 5G spectrum.   

Here are the key highlights of the 5G Spectrum auction:  

• • • The auctioned spectrums are available in 600 MHz, 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz, 3300 MHz, and 26 GHz bands.  

• • • The spectrums allotted via this auction can be used for 5G (IMT-2020) or any other technology within the scope of the Access Service License.   

• • • It is a Simultaneous Multiple Round Ascending (SMRA) e-auction.  

• • • A total of 72097.85 MHz of the spectrum has been put to auction and will be assigned for 20 years.   

• • • In case of successful bidding, bidders will have to pay in 20 equal annual installments, duly protecting the NPV at the interest rate of 7.2%.   

• • • Spectrum acquired through this auction can be surrendered after a minimum period of 10 years and there are no Spectrum Usage Charges (SUC) for the acquired spectrums in the auction.   

In the case of Successful Bidders  

Successful bidders will have to submit a Financial Bank Guarantee (FBG) and Performance Bank Guarantee (PBG). Licensees can set up an isolated captive non-public network(s) for industries using the spectrum acquired through this auction.  

In case there is a demand for spectrum and bidders putting in bids, the bidding process will be extended to the next day. However, the number of days of the auction will depend on the actual demand for radio waves and the strategy of the individual bidders. (Although, the broad industry consensus is that it may last up to two days.)  

What does the Govt. Of India expect from the auction?  

The Department of Telecom expects ₹ 70,000 crores to ₹ 1,000,000 crore expects the 5G Spectrum auction to ring in new-age offerings and business models, and enable ultra-high speeds—about 10 times faster than 4G.  

Jio has made a ₹ 14,000 crore Earnest Money Deposit (EMD) while rival Adani group made a modest ₹ 100 crore deposit. EMD of all the four applicants seeking 5G radio waves this time adds up to ₹ 21,800 crores, a level substantially higher than ₹ 13,475 crores deposited in the 2021 auction when three players were in the race. Airtel had put in ₹ 5,500 crore as EMD, while for Voda Idea the amount stands at ₹ 2,200 crores.  

Jio could lead the spending, followed by Bharti Airtel while analysts see limited Vodafone Idea and Adani Group participation. Previously, Adani had clarified that the airwaves it sought was to set up a private network to help digitize its businesses from airports to energy to data centers.  

Simply put, this meant no entry into the consumer mobile telephony space, where Jio is the largest player.  

Usually, EMD amounts indicate the players’ appetite, strategy, and plan for picking up the spectrum in an auction. It also determines the eligibility points, through which telcos target specific amounts of spectrum in various circles.