Telecom Companies Submit Bids For The Spectrum Auction, Jio Pushes Rs.3,000 Cr

The department of telecom has received applications for the spectrum auction from the three telecom operators- Reliance Jio, Bharti Airtel and Vodafone Idea. These three will battle it out to get a piece of 5G spectrum worth around Rs.96,300 crores to be offered in the upcoming auction that will start on June 6. 

Details regarding the Auction

The Department of Telecom had invited applications for the auction of spectrum in the 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz, 2,500 MHz, 3,300 MHz, and 26 GHz bands, with the total valued at around Rs 96,317.65 crore. The last date for the submission of bids was May 6. The spectrum will be assigned for a duration of 20 years. Successful bidders will be allowed to make payments in 20 equal annual instalments. 

Additionally, after a minimum period of 10 years, telecom companies will have the option to surrender the spectrum they acquired. This flexible payment structure and surrender option are expected to make the auction more appealing to potential bidders, providing long-term investment security and operational flexibility.

How Much Are The 3 Participants going to spend?

Bharti Airtel has renewals for 42 MHz of spectrum in the 1,800 MHz and 900 MHz bands across six circles, This would result in spending of around Rs.3,800 crores. Additionally, it may bid to increase its holdings in the 800 MHz/1,800 MHz bands to 10-15 MHz and in the 2,300 MHz bands to 40 MHz, this will potentially lead to a maximum spend of Rs 12,300 crore.

Reliance Jio may have limited bids as it has made huge investments in the past two auctions. The Mukesh Ambani-owned telecom company has a portfolio of spectrum in the sub-GHz band, aggregating 5x20MHz spectrum in the 700MHz and 800MHz bands. The company may increase its spectrum holdings in certain circles in the 800 MHz band, which will lead to a spending of Rs.3,700 crores.

Vodafone Idea may spend the least amount of all three, As the company has ample spectrum in renewal circles in the 1800 MHz band, it may opt not to renew spectrum for the 1800 MHz band, While it may go for renewal in 900 MHz band, Thus spending if it goes for renewal of all bands would be at maximum around Rs.1500 crores.

Conclusion: The Department of Telecom(DoT) has opened spectrum auctions totalling Rs 96,317.65 crore. Bharti Airtel may spend the most, up to Rs 12,300 crore for renewals and additional spectrum. Vodafone Idea, backed by a Rs 20,000 crore fundraise, plans to spend Rs 1,500 crore on renewals. Reliance Jio may invest around Rs 3,700 crore for its 800 MHz holdings. The spectrum will be assigned for 20 years, with payment options over 20 equal annual instalments and a surrender option after 10 years

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.