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Photo: Mint

What’s at stake in the upcoming spectrum sale

The Centre has finally decided to hold the spectrum auction in March after over four years. While Reliance Jio needs airwaves to continue its 4G offerings and new spectrum to roll-out 5G services, Bharti Airtel and Vodafone Idea may have to set priorities straight. Mint explores

The Centre has finally decided to hold the spectrum auction in March after over four years. While Reliance Jio needs airwaves to continue its 4G offerings and new spectrum to roll-out 5G services, Bharti Airtel and Vodafone Idea may have to set priorities straight. Mint explores

What does the auction have in store for Jio?

The auction is crucial for Mukesh Ambani-led Reliance Jio Infocomm Ltd as its licence for a major chunk of spectrum in the 800-megahertz (MHz) band will expire next year. Jio, the largest telecom operator in India by market share, so far used bankrupt Anil Ambani-led Reliance Communications’ spectrum under a trading and sharing agreement to provide 4G services across 21 circles. The licence for 18 circles is set to expire in July-August. Jio provides only 4G services and claims to have an indigenous 5G solution, which will be launched as soon as the spectrum becomes available.

Does the spectrum auction include 5G?

The DoT (department of telecommunications) will sell spectrum in the 700MHz, 800MHz, 900MHz, 1,800MHz, 2,100MHz, 2,300MHz and 2,500MHz bands, some of which are touted as the most efficient for 4G services. Spectrum in 3,300-3,600MHz bands, which were recommended by the regulator for 5G, have not been included in the auction. At the India Mobile Congress 2020, Mukesh Ambani said, “I assure you that Jio will pioneer the 5G revolution in India in second half of 2021." Experts believe Jio may add new spectrum that can support high speed and low-latency 5G technology.

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What is expected of Bharti Airtel and Vodafone Idea?

Airtel and Vodafone have maintained that the reserve price of 3.92 trillion is not affordable. Therefore, they might look at renewals to expand coverage and increase 4G services capacity to meet rising data consumption. Experts said the auction could be a repeat of the October 2016 fiasco when large chunks of spectrum were left unsold due to high reserve prices.

Are Vodafone, Airtel ready for 5G roll-out?

Airtel chairperson Sunil Mittal recently said India is two-to-three years away from 5G launch. Its top officials also said India’s ecosystem is underdeveloped for 5G, which needs large-scale fiberization of telecom towers. Airtel CEO Gopal Vittal had said the core issue is the cost of spectrum, which “is over the top for any business model to work". Vodafone Idea claims to be 5G-ready and can begin trials as soon as spectrum is available, but experts say its financials may not allow it to add spectrum in the next auction, let alone for 5G.

How much will the government earn?

According to analysts, the auction may fetch 55,000-66,000 crore, on a par with the 2016 auctions, when the government had raised just 65,789 crore at a fraction of the 5.63 trillion worth of airwaves put up for sale. The industry will have to shell out 20,000-25,000 crore upfront, a major part of which will be paid by Reliance Jio as it will buy spectrum in the relatively expensive 800MHz band. Airtel and Vodafone Idea have also been re-farming existing 2G airwaves to 4G, which may limit their need to buy spectrum

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