Spectrum Auction 2024: What to Expect from the Rs 96,300 Crore Event

The Union government is set to commence a significant spectrum auction on Tuesday, putting airwaves worth Rs 96,300 crore up for grabs. This event will see major telecom players like Bharti Airtel Ltd., Reliance Jio Infocomm Ltd., and Vodafone Idea Ltd. participating, having collectively deposited earnest money of Rs 4,350 crore.

Key Details of the Auction

According to a report, the three participating telecom companies have deposited EMDs totaling Rs 4,350 crore. This amount allows for a maximum bid of Rs 52,200 crore, based on a 12 times Earnest Money Deposit (EMD) limit. Successful bidders are required to make payments within 10 days, or they can opt for 20 annual installments at an 8.65% interest rate. Notably, there will be no Spectrum Usage Charges (SUC) for the spectrum acquired in this auction. The spectrum will be assigned for a period of 20 years, with an option to surrender it after 10 years.

Bharti Airtel’s Strategy

Bharti Airtel has deposited Rs 1,050 crore as EMD, giving it a maximum bidding potential of Rs 12,600 crore. Airtel needs to renew its spectrum in the 900 MHz and 1800 MHz bands across six circles—Uttar Pradesh (East), Uttar Pradesh (West), West Bengal, Assam, Bihar, Jammu and Kashmir, and Odisha—at a potential cost of Rs 3,820 crore at the reserve price.

Vodafone Idea’s Approach

Vodafone Idea, with the lowest EMD deposit of Rs 300 crore, can bid up to Rs 3,600 crore. The company’s licenses are expiring in West Bengal and Uttar Pradesh (West) in the 900 MHz and 1800 MHz bands, requiring an estimated Rs 1,480 crore for renewal. Vodafone Idea might also look to acquire spectrum in Andhra Pradesh and Madhya Pradesh to enhance its bandwidth in the 900 MHz band or consider the 26 GHz band to lower SUC charges. Currently, Vodafone Idea holds 5,350 MHz of spectrum in the 26 GHz band, compared to Bharti Airtel’s 17,600 MHz and Jio’s 22,000 MHz, indicating the potential for further acquisitions.

Reliance Jio’s Potential Moves

Reliance Jio has deposited Rs 3,000 crore, enabling it to bid for the maximum spectrum. Although Jio has aggressively purchased spectrum in previous auctions and does not have any spectrum due for renewal this time, its substantial existing holdings include 24,740 MHz of spectrum from the last auction. The only possible gap in Jio’s portfolio could be in the 700 MHz band, which is used for its SA 5G services. However, this band is not available in the current auction.

Conclusion

The 2024 spectrum auction is poised to be a significant event in the telecom industry, with major players gearing up for strategic bids to enhance their service capabilities. With a total of Rs 96,300 crore worth of airwaves on the block, the outcomes of this auction will shape the future landscape of telecom services in India.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.