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Government prepares to auction telecom spectrum from May 20 worth ₹96,318 crore

Updated – March 08, 2024 at 09:14 PM.
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New Delhi

Analysts see not much takers for the fresh airwaves

According to the DoT, spectrum that is owned by some businesses going through bankruptcy procedures and frequencies that expire this year will also be auctioned off


According to the DoT, spectrum that is owned by some businesses going through bankruptcy procedures and frequencies that expire this year will also be auctioned off
| Photo Credit:
PICHUMANI K

The government said on Friday it will auction eight spectrum bands for mobile phone services at a base price of ₹96,317.65 crore, starting May 20.

The Department of Telecommunications (DoT) issued a notice inviting applications (NIA) for the auction of spectrum in the 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz, 3300 MHz, and 26 GHz bands.

According to the DoT, spectrum that is held by some businesses going through bankruptcy procedures and frequencies that expire this year will also be auctioned off.

It said the last date for seeking clarifications on NIA will be March 26, and the last date for submission of applications will be April 22, before the final list of bidders is announced on May 9. Mock auctions will take place on May 13 and 14.

“The auction shall be a simultaneous multiple-round ascending (SMRA) e-auction. The cumulative reserve price of the 10,523.15 MHz spectrum put to auction is ₹96,317.65 crore. The spectrum will be assigned for a period of 20 years,” it added.

In a post on X, Ashwini Vaishnaw, Minister of Communications and IT, said, “Annual spectrum auction calendar is a major reform. Now telecom service providers will get the opportunity to buy spectrum regularly in a transparent way.”

The dates of the spectrum auctions indicate that the process may begin after the Lok Sabha elections, but there is no clarity yet on the matter. The auction was approved by the Union Cabinet in February.

‘Dull event’

According to analysts tracking the sector, the spectrum auction this year may be a dull event, as not many telecom service providers (TSPs) are willing to buy fresh radiowaves.

“Most of the telcos have enough spectrum already, and they require very little for those circles for which the licenses are expiring. Whether it is Bharti Airtel (Airtel) or Vodafone-Idea (VIL), they have enough spectrum and would acquire only that spectrum wherever they need to renew circles (licence areas),” a Delhi-based analyst said.

For instance, Airtel may purchase certain spectrum (around 25 MHz) in the 900 and 1800 MHz range to strengthen its 5G network and also for certain circles like West Bengal, Uttar Pradesh, Bihar, Jammu & Kashmir, and Odisha where the licences are expiring.

Similarly, VIL, too, may also acquire very little spectrum, just enough to renew its licenses in certain circles.

Shift in focus

In 2024, telcos are likely to shift their focus to monetisation by announcing tariff hikes as 5G adoption picks up and may also introduce 5G-specific tariffs, Jefferies said in its 2024 sector outlook.

“We see spectrum demand in the upcoming auctions as focused only on renewals, which should limit capex and support free cash flow (FCF)…Given that operators have acquired $5-10 billion worth of spectrum in 2022, which is largely unutilised, and have merely $0.7 billion worth of spectrum coming up for renewal, we expected limited bidding, which should limit risks to FCF,” it had said.

The government earned a total of ₹1,50,173 crore from the last auction held in July 2022, which was the highest-ever revenue collected from a single auction.

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