5G auctions gross Rs 149,454 crore at end of Day Two

“As we continue with 5G spectrum auction, at the end of the ninth round, we have grossed about Rs 149,454 crore. We have been able to successfully generate confidence in the industry,” said Ashiwni Vaishnaw, Minister for Communications, Electronics & Information Technology and Railways at the press conference held on July 27.

“The 700 MHz band is very important. We are confident that this (sale of the band) will provide a very high quality of service to the far-flung areas of our country. In all those places, coverage is very important. To get good coverage, you need a lower band.”

The 700 MHz band had gone unsold in the last two auctions, owing to its high price. For this sale, the rate was cut by 40%. RJio is the only buyer of the 700 MHz band buying 10 MHz across India, along with 100 MHz of the mid-band (3.3-3.67 GHz) and 800 MHz of high-band (26 GHz) spectrum, in each of India’s 22 circles.

Airtel is estimated to have also bought 100 MHz in all circles of the mid-band spectrum, besides 800 MHz each of the high-band in all circles; 13 MHz spectrum in 900 MHz band in C circles (smaller towns and cities), where it had a spectrum gap; 44 MHz in the 1800 MHz band in nine circles and 30 MHz in the 2100 MHz band in six circles.

Vi may have bought 50 MHz spectrum in mid-band in its 17 priority markets; 400 MHz spectrum in the 26 GHz band in 16 circles and 10 MHz each in Andhra Pradesh and Punjab in the 2500 MHz band.

The first day ended after four rounds. The government expects the sale to close today, July 28.

Potential spectrum payout, out of the total bidding worth Rs 149,454 crore on Day-2, is estimated at:

RJio:Rs 84,300 crore (vs Rs 80,100 crore on Day-1);

Bharti Airtel:Rs 46,100 crore (vs Rs 45,000 crore on Day-1), and

VIL:Rs18400 crore.

Adani’ estimate is a commitment of Rs 900 crore.

Some Responses
Nomura
“The 700 MHz band would give Jio an edge in terms of network quality, especially indoors, and that this could increase investors’ concerns on further spectrum outgo in the next round of spectrum auctions for telcos who haven’t bid for 700 MHz this time.”

Goldman Sachs
“Jio’s purchases of 700 MHz spectrum will expand its lead versus Bharti in the sub-GHz band as it’s good for coverage, and we view this as a negative for Bharti as we believe this could result in the latter having to add spectrum in sub-GHz bands in future auctions (and hence increase Airtel’s balance sheet leverage) to keep pace with Jio’s network quality.”

ICICI Securities
“Jio, which is targeting big-bang pan-India 5G rollout, was the sole buyer of the 700 MHz band, buying 10 MHz across India, along with 100 MHz of the mid-band (3.3-3.67 GHz) and 800 MHz of high-band (26 GHz) spectrum, in each of India’s 22 circles.”

CT Bureau