Kolkata: Ether bids increased by Rs 112 crore on Saturday, in India’s first 5G auctions, raising the government’s total collections to Rs 1,49,967 crore by the end of Day 5, even as the battle for 1800 MHz spectrum in key Uttar Pradesh (East) market appeared to have eased, indicating that the auction is likely to close soon.
“Demand for 1800 MHz in the UP (East) circle was more subdued today, suggesting the auction may end soon,” a top telco executive, who declined to be named, told ET.
Bidding will resume on Sunday, day 6 of the exercise, from round 31, with some industry trackers expecting sales may end on the same day.
Speaking to reporters at an event in Mumbai on Saturday, Telecom Minister Ashwini Vaishnaw said he expects the first wave of 5G rollouts in India by October, and sees strong adoption levels over the next 18 months as 5G devices become more affordable.
“(I) expect to see a good presence of 5G within one and a half to two years. Post-rollout… the industry tells us that 5G handset (prices) will fall to Rs 10,000 soon,” Vaishnaw said.
The minister also expects the telecom market to see healthy competition and to maintain its structure with three private players, eliminating the chance of narrowing into a duopoly.
On the fifth day of the 5G auctions, there were seven more rounds of bidding, but despite there being no excessive demand in the final rounds, the unit price of 1800 MHz spectrum in UP (East) was almost 60% higher than the base price from Rs 91 crore, at Rs 145.47 crore.
In fact, the current auction price of 1800MHz spectrum in Uttar Pradesh (East) is close to the Rs 153 crore base price of the March 2021 auction.
Auction followers estimate that outflow for the 1800 MHz band in India has risen to Rs 10,170 crore – nearly five times the base price of Rs 2,116 crore.
In the past three days, the price of 1800 MHz spectrum for UP (East) has risen above the reserve price as Bharti Airtel battled it out with Reliance Jio to protect its market share in India’s most populous circle, especially as some of its 900 MHz ether waves expire in 2024, according to industry experts.
At the close of Saturday’s bidding, analysts estimated that Jio’s total spectrum purchases would exceed Rs 84,000 crore, while Airtel’s was estimated at over Rs 46,200 crore. Vodafone idea‘s expenses are pegged at around Rs 18,600 crore.
High stakes
The outcome of the spectrum battle in UP (East) is vital for Airtel, as it has 5 MHz liberalized 900 MHz spectrum, or airwaves bought at auction, and another 6.2 MHz non-liberalized spectrum in the same band in that circle, which expires in February 2024. Non-liberalized airwaves are those allocated through the administrative route, or without auctions.
The stakes are high in the UP (East) circle for the Sunil Mittal-led telco, which could face business challenges after February 2024 if it doesn’t get at least 5 MHz of backup airwaves in the 1,800 MHz band.
Otherwise, only 5 units of liberalized 900MHz airwaves would remain, which will not be enough to fight Jio, especially since the last 10 units have purchased super-efficient 700MHz spectrum across India, including in UP (East). ).
Airtel is engaged in a bidding duel to defend its market share in this key circle. In UP (East) no 900 MHz spectrum is offered in this auction.
At the moment, Airtel has 15 MHz liberalized spectrum in the 1800 MHz band in UP (East), while Vi and Jio have less – 10 MHz each.
Analysts said the circle is the fourth largest service area in terms of adjusted gross revenue (AGR), accounting for 6.6% of AGR revenue. Also for individual operators, the service area accounts for a fairly large share of their gross revenues – ranging from 6.5% for Vi to 8.4% for Airtel and 7.6% for Jio.
Of the circle’s 101.54 million subscribers, Airtel has the highest share, with 37.46 million users, followed by Jio with 32.92 million users, Vi with 20.23 million and Bharat Sanchar Nigam (BSNL) with 10.91 million. But Jio has the highest market share (RMS) at 48.2%, with Airtel a close second at 39.9%, while Vi lags behind on this score, at a modest 9.4%.
A rich harvest
Telcos were bidding on ether worth Rs 1,49,855 crore at the end of Day 4. The previous record for government spectrum auction collections was Rs 1.09 lakh crore, in 2015.
New participant Adani data networksa unit of Adani Enterprises, is estimated to have made an offer for Rs 700-800 crore or 5G spectrum in the high band, which is necessary for its captive networks.
In this year’s auction, the government has offered a 72GHz shade of 5G airwaves in 10 bands worth Rs 4.3 lakh crore at minimum prices for 20 years. So far, more than 40% of the spectrum for sale has been bid.
On offer are low-band ether waves (600 MHz, 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz), mid-band or C-band (3.3-3.67 GHz ) and high band (26GHz).
While the action was entirely focused on UP (East), the other bands have seen no change in the overall outflow in the past two days.
Carriers have spent Rs 80,590 crore on C band (3.5GHz) so far; Rs 14.709 crore on the high band (26 GHz); Rs 3,180 crore on the 2100MHz band; and Rs 39,270 crore on the 700 MHz band.
The expensive yet super efficient 700MHz band saw bidding for the first time in this auction, with Jio buying these airwaves across India and spending Rs 39,270 crore. The tire had gone unsold in the past two auctions due to the high price the carriers said. For this sale, the base rate was reduced by 40%.