The two-day telecom spectrum auction for the 4G airwaves worked quite beyond expectations for Jio, Airtel as well as the government.
Spectrum Auction
The two-day spectrum auction for the 4G airwaves was held on March 1st and 2nd, 2021 after which the government ended up receiving bids worth ₹77,814.8 crore. For the government, this spectrum sale was a successful event and had exceeded their expectations.
According to the Telecom Secretary Anshul Prakash, the government had anticipated that the spectrum which will be sold will be about ₹45,000–50,000 crore given the Covid scenario and other stress situations that telecom the sector might be facing. The actual figure and participation was far beyond expectations for the government.
Reliance Jio emerged as the biggest buyer by acquiring a total of 488.35 MHz of spectrum for ₹57,122.65 crore, followed by Bharti Airtel with 355.45 MHz at ₹18,698.75 crore, and Vodafone Idea with 11.80 MHz for just ₹1,993.40 crore.
As per analysts, the auction may lead to Jio and Bharti Airtel gaining more market share in the telecom industry. This may also act as a turnaround for Bharti as it looks to compete with Jio and also gear itself up for the 5G wave.
Whereas Vodafone Idea may become weaker being the marginal player in the latest spectrum sale as it remains unprofitable and is looking to raise funds to survive. Unless Vi secures funds quickly, it may fail to ramp up its operations for 4G operations as well as will not be able to aggressively take part in the future for the 5G-scale auctions and rollouts.
Mop-up target
The government had targeted to mop-up ₹3.92 lakh crore by auctioning spectrum across 7 bands which would help boost its revenue. However, the 700 MHz and 2,500 MHz bands did not receive bids and were left unsold. The 700 MHz band, worth nearly ₹2 lakh crore, went unsold due to its high base price despite a 43% cut from 2016 when it had also found no takers.
Therefore, if the government plans to cut the price again and put the bands on the auction table again, it may get close to its targeted revenue from the spectrum auction. Telecom secretary added that the telcos may want to buy 700 MHz spectrum, which is considered good for 5G as well, at the next sale to be held in FY22, which will see the debut of airwaves in the 3300MHz-3600MHz band.
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