After two days of spectrum auction, India garnered 36% of the estimated revenue. A better than expected outcome by some measure because many in the industry believed believed Mint 5G spectrum auction starts today: DoT expects to generate ₹ Read more that the Indian government would pocket just about 25% of the Rs 4.31 lakh crore (US$60.9 billion) of the spectrum revenue in this auction.
Yet, the largest ever telecom spectrum auction in the country was more of a predetermined sale than a real auction. Ultimately, the telcos bought every bit of the radio spectrum on offer at the reserve price—not even a token rupee higher. On day one, telcos bought spectrum worth Rs 1.45 lakh crore (US$18.14 billion); on day two, it was a modest Rs 4,454 crore (US$557.2 million) addition, taking the total auction amount to Rs 1.49 lakh crore (US$18.7 billion). The auction is practically over but some nominal purchases may happen on Thursday, according to government officials.
It’s fair to say, the telcos kept to the tradition of not bidding higher than the reserve price, not even for the 5G spectrum, which was on offer for the first time. The telecom agencies, on their part, entered this auction upholding their tradition—of charging high upfront.
The story was the same in 2021 and 2016 when the telcos did not bid higher than the reserve price for their required spectrum. Thursday will decide if this year’s auction is better than 2021 when the government sold only 37% of the spectrum. In 2016, it sold 41%.
Unsurprisingly, everyone lapped up the spectrum for 5G services—in the mid-band (3.3-3.67GHz) and the higher band (26GHz). Most other bands, where telcos could have bought spectrum to bolster their existing network or expand their coverage, remained untouched on day one. Though the telecom minister Ashwini Vaishnav said on Wednesday that telcos have shown interest in other bands too.
The biggest surprise of the day, however, came from the country’s largest telco, Reliance Jio. In an unexpected strategic play, the telco bought 10MHz (or two blocks of 5MHz each) in the 700MHz band in 22 circles.
The 700MHz band, deemed to be priced high, remained unsold in the previous two auctions. This band is meant for wider coverage and well-suited for broadband rollout in rural areas, which isn’t a lucrative business proposition for private telcos.
In the run-up to the auction, analysts and industry veterans had considered this a “low probability” purchase. This is because 700MHz spectrum in the kitty could come in handy for 5G, but it also runs the risk of becoming “a white elephant” for Jio due to the high cost.