Home / Companies / News /  Jio buys most 4G spectrum as bids exceed govt expectations

The government wrapped up an auction for fourth-generation, or 4G, airwaves, generating 77,814.80 crore in proceeds, or about a fifth of the spectrum value put on sale. It, however, claimed the auction was a success as demand “far exceeded" its modest expectations.

Reliance Jio Infocomm Ltd, India’s largest telco, emerged as the top bidder, cornering roughly three-fourths of the spectrum sold in the two-day event.

“Given the covid scenario and other stress situations the sector is facing, we had anticipated spectrum sold would be 45,000-50,000 crore. We are happy that the industry is confident, and it has bid to acquire more," Anshu Prakash, secretary, department of telecommunications (DoT), told reporters on Tuesday. Analysts had estimated that the auction will fetch the government about 60,000 crore.

Reliance Jio emerged as the top bidder, cornering nearly three-fourths of the spectrum on sale
View Full Image
Reliance Jio emerged as the top bidder, cornering nearly three-fourths of the spectrum on sale

Reliance Jio bought radio airwaves worth 57,122.65 crore in the first spectrum auction in more than four years. Bharti Airtel Ltd purchased spectrum worth 18,698.75 crore, while Vodafone Idea Ltd’s (VIL’s) participation was limited. VIL placed bids worth 1,993.40 crore, largely for spectrum renewal.

Operators bid for about 20% of the 3.92 trillion spectrum put on sale at the minimum price set by the government, according to DoT figures.

Bharti Airtel and Vodafone Idea had earlier indicated that they would bid selectively to renew spectrum licences or improve coverage. Both, especially Vodafone Idea, are recovering from a bruising price war with Jio and an unfavourable Supreme Court verdict that left their finances in a shambles. Jio, on the other hand, is flush with funds, with its parent having raised 1.52 trillion for the telecom and digital businesses in the past year.

The government will, however, get just 19,000-20,000 crore in the year to 31 March from the latest sale as auction rules allow operators to stagger payments, Prakash said. Still, the money will be crucial for the government as it stares at a record fiscal deficit of 9.5% this year.

The three companies acquired 855.6MHz of the total 2,308.8MHz on sale. Of the seven bands available for auction, demand for 800MHz and 2,300MHz bands was the highest, while there were no takers for the 700MHz and 2,500MHz bands, he said.

“The telcos not only bid for renewals of the expiring spectrum but focused on consolidating their spectrum holdings in the 800MHz, 900MHz and 2300MHz bands. While the sub-GHz bands will be crucial for 5G technology deployment as well as improvement of indoor coverage, the appetite for 2,300MHz band stems from rising mobile broadband usage and, thus, the need for improving network capacity," said Ankit Jain, assistant vice president, ICRA Ltd.

Spectrum in the 700MHz band went unsold because of the high base price, analysts said.

“The 700MHz band, coupled with the 3.5GHz band, has the potential to accelerate India’s progress to the top league of digitally enabled nations. Therefore, the reserve pricing of these bands must be addressed on priority in future," Airtel said in a statement earlier on Tuesday.

Prakash said there is a possibility that the 700MHz band could be used in the next spectrum auction for 5G services. The 700MHz band can support 5G due to its high efficiency, which also makes it the most expensive in the latest auction.

“With our increased spectrum footprint, we are ready to further expand the digital footprint in India as well as get ourselves ready for the imminent 5G rollout," said Reliance Industries chairman Mukesh Ambani. Jio is a unit of RIL.

Prakash said the government may reconsider the pricing of the 700MHz spectrum band in consultation with the sector regulator, which earmarked 3,300-3,600MHz bands for 5G. The timeline for the 5G auction has not been decided by DoT.

According to a Parliament standing committee report tabled on 8 February, Prakash said the government will conduct 5G spectrum auction in the next six months.

Prakash told the panel that 5G, in DoT’s assessment, will be rolled out by the end of 2021 but not on a pan-India basis. The next-generation wireless technology will be launched in “select areas where the demand would justify the capex".

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Never miss a story! Stay connected and informed with Mint. Download our App Now!!

Edit Profile
Get alerts on WhatsApp
My ReadsRedeem a Gift CardLogout