5G spectrum auction sparks Rs 1.5 trillion bids

The 5G spectrum auction which kicked off on Tuesday fetched bids of over Rs 1.45 lakh crore after four rounds, with the 700 MHz getting bids for the first time.

“Bid amount exceeds Rs 1.45 lakh crore (trillion) on the first day of four rounds of bidding…most probably the auction process could end by tomorrow (Wednesday),” telecom minister Ashwini Vaishnaw told reporters.

The minister said the government intends to allocate the spectrum “in record time” — by August 15 — with a rollout of service expected by September.

Several cities across the country would be ready to experience the 5G services by the end of 2022.

He said the auction will most likely be completed on Wednesday.

The bids were better than the government’s estimates of Rs 80,000 crore to Rs 1 lakh crore and a new record, up from Rs 1.09 lakh crore in the 2015 auction.

There were also interest for the 700 MHz band frequencies, which did not attract bids in 2016 and 2021 auctions.

Four rounds of auctions were held on the opening day, with the mid- and high-end bands seeing keen interest. The 3300MHz and 26GHz bands attracted strong bids.

The bidding pattern at the end of the first day clearly shows that the telecom players were piling into the 700 MHz and the 26 giga hertz (GHz) bands in the 5G spectrum auction.

The 3300 Mhz band also drew a lot of bids.

The telecom players were ready to pay top dollar for the 700 MHz band where the bids were uniformly five times the reserve price at the end of the fourth round. The datasheet showed a demand for two of the five slots available per telecom circle in the band.

In the 700 MHz band, Delhi received a bid of Rs 2,545 crore against a reserve price of Rs 509 crore while Mumbai had received a bid of Rs 2,350 crore against a reserve price of Rs 470 crore.

In Calcutta, the bid came in at Rs 865 crore against a reserve price of Rs 173 crore. Other circles where there was strong interest in the 700 MHz slots were Maharashtra (Rs 1,795 crore), Andhra Pradesh (Rs 1,590 crore), Gujarat (Rs 1,410 crore), Tamil Nadu (Rs 1,265 crore) and Karnataka (Rs 1,100 crore).

In all the circles, the demand was for two slots – and seemed to indicate that it came from one bidder alone, possibly Reliance Jio. There were no bids for 700 Mhz slots at the auction conducted in March 2021.

But the real whopper in terms of the bid markup over reserve price was the 26GHz band. The bids were universally 50 times the reserve price. The reserve price for the radio waves in this band was Rs 89 lakh in Delhi; the bid at the end of the fourth round came to Rs 44.5 crore with a clear demand for 40 of the 57 slots on offer.

Mumbai went for Rs 39 crore (reserve price of Rs 78 lakh) while Calcutta saw a fourth round bid of Rs 16 crore (reserve price: Rs 32 lakh).

The other band that saw some interest was the 3300 Mhz band where bids were 10 times the reserve price.

Delhi saw the fourth round bid close at Rs 400 crore for 25 of the 33 slots against a reserve price of Rs 40 crore. Mumbai rose to Rs 350 crore and Calcutta at Rs 150 crore – all 10 times higher than the reserve price and for 25 slots.

Three new bands were offered in this auction: 600 Mhz, 3300Mhz and the 26Ghz band. There were no demand for slots at the end of the fourth round in the 600 Mhz band.

Prashant Singhal, EY Global TMT Emerging Markets Leader said “the 1st day  is in line with the expectations, particularly for 3300 MHz and 26 GHz bands. It clearly highlights that the coveted 5G spectrum is much in demand”.

“Bidding in the 700 MHz band was surprising considering the price. However, it is reflective of the need to provide pan-India coverage for 5G. There is no excess demand in any of the bands,” he said.

The Telegraph