India's first auction of telecom spectrum in five years ended on Tuesday with Rs 77,814.80 crore of airwaves being acquired. Mostly, by billionaire Mukesh Ambani's Reliance Jio which picked up spectrum for Rs 57,122.65 crore.
About 2,308.80 MHz of spectrum, that carry telecom signals in seven bands worth nearly Rs 4 lakh crore at the reserve price, was up for bidding in the auction.
Although the spectrum finally acquired by telcos fell woefully short of this overall kitty and was acquired only at the reserve price, the Telecom Department said it is satisfied with the outcome as the numbers had exceeded internal estimates despite the pandemic and stress in the telecom industry.
Of the total proceeds, the government would get Rs 19,000-20,000 crore in the current financial year and Rs 6,000-7,000 crore would accrue in the next fiscal as the auction offers bidders the option of upfront and deferred payment (in annual installments).
Jio cornered more than half of the telecom spectrum that was finally auctioned by the government over the past two days, offering about Rs 57,123 crore to consolidate its holding of the scarce resource that is used to carry mobile calls and data signals.
Jio bagged 488.35 MHz spectrum in bands such as 800 MHz, 1800 MHz and 2300 MHz.
Telecom giant Bharti Airtel bid about Rs 18,699 crore to pick up 355.45 megahertz (MHz) out of the total 855.60 MHz of radio frequency acquired by telcos, making it the "most formidable" spectrum holding in the country.
Vodafone Idea Ltd, which is facing a huge liability of unpaid statutory dues of past, bought 11.80 Mhz of spectrum worth Rs 1,993.40 crore.
However, airwaves in the premium 700 MHz and 2,500 MHz bands went unsold.
Telecom Secretary Anshu Prakash said 855.60 MHz of spectrum was bought for Rs 77,814.80 crore in the two-day auction.
Airwaves come in different bands which support different propagation characteristics for transmission of voice and data. For instance, lower bands like 800 MHz and 900 MHz support a good indoor coverage while higher bands like 2300 MHz have a good carrying capacity.
The airwaves are also sold in quantities measured as MHz. The auctions allow companies to use government owned airwaves for carrying signals for data and voice, for a particular period of time.
Reliance Jio Infocomm Ltd said it acquired the right to use spectrum in all 22 circles or zones across India. In all it won 488.35 MHz of spectrum, taking up its spectrum footprint by 55% to 1,717 MHz.
Jio raced to become the leading telecom operator in the country within four years of launching services in 2016 offering free voice calls and data at economical prices, and its subscriber base stood at 408.7 million subscribers as of December 2020.
Bharti Airtel said it won spectrum across Sub GHz, mid-band and 2300 MHz bands, giving it a secured pan-India footprint that will help improve its deep indoor and in building coverage in every urban town. Moreover, the spectrum will also help improve its coverage in villages, an Airtel statement noted.
Airtel pointed out that despite a large amount of spectrum made available, the 700 MHz band did not get any bid from the operators as it made "no economic case" for them due to the high reserve prices.
Briefing reporters, the telecom secretary said that quality of service and customer experience is expected to improve with deployment of additional spectrum acquired in networks of telecom service providers.
While the first day of auction fetched bids of Rs 77,146 crore, over Rs 668 crore of incremental bids came in on Tuesday.
Excluding spectrum in 700 MHz and 2500 MHz bands, this is about 60% of the spectrum that was put to auction. In the 2016 spectrum auction, where there were seven bidders, the spectrum sold was 41% by quantity and 12% by value of the total spectrum put on auction. The corresponding figures in the 2021 spectrum auction were 37% and 19% respectively, with just three players.
The bands of 2300 MHz and 800 MHz saw maximum interest from bidders. In the 800 MHz band, the quantity acquired by telcos is 65% of the total 230 MHz that was on the block; in the 2300 MHz band, over 89% of radio waves offered were eventually acquired.
Players will also have to pay Spectrum Usage Charges (SUC) at the rate of 3% of Adjusted Gross Revenue (AGR), excluding revenue from wireline services.
The outcome of the auction will be scrutinised by an Inter Ministerial panel and will thereafter be approved by Communications Minister and Finance Minister; the entire exercise is expected to be completed in the next 10 days or so.
For spectrum that was auctioned and is available immediately, payments from players will come in before the end of the current fiscal year. A portion of the spectrum will also be made available during the year.
On the future course for the 700 MHz band, Prakash said considering the fact that no bid has come, "it is something we will see".
He added, "There is a possibility that with 5G technology coming, and the fact that the 700 MHz 5G ecosystem is also developing, there is a chance that in the next auction, the 700 MHz band will also be used.”