With 5G monetisation a struggle and no spectrum shortage, subdued auction expected

The upcoming spectrum auction, which the government is expected to conduct over the next three months, may see a subdued response from telcos as demand is likely to be restricted to airwaves which will be up for renewal in some circles, sources said.

Against the Rs 1.5 trillion-worth 5G spectrum sold in the last spectrum auctions, this time the spectrum auction is estimated to fetch around Rs 8,000-9,000 crore to the government, officials said.

The main reason for telcos not going for aggressive bidding this time is that they already have ample spectrum. With no scope of 5G monetisation, they don’t see the need to spend further. The combined capital expenditure of Jio and Bharti Airtel in FY24 is expected to be around Rs 75,000 crore.

In the upcoming auction, spectrum bands in 600 MHz, 700 MHz, 800 MHz, 900 MHz, 2100 MHz, 2300 MHz, 2500 MHz, 3300-3670 MHz, and 26 GHz worth about Rs 2.7 trillion is expected to be put on sale by the government.

Renewal of spectrum is due in 900 and 1800 MHz bands in eight circles – Uttar Pradesh (East), Uttar Pradesh (West), West Bengal, Assam, Bihar, Jammu and Kashmir, North-East, and Odisha in February by Airtel and Vodafone Idea.

Jio may bid for some fresh spectrum. Last month, Bharti Airtel’s managing director and chief executive officer Gopal Vittal said that the company will be spending a lot less on the future spectrum auctions as it does not require additional airwaves.

“I would not imagine that the company needs further spectrum for some time to come. The only place where some small chunks of spectrum may be needed is renewable spectrum in three or four circles, but it is a function of the traffic pattern. How much do we need? Do we need it at all? Those discussions are still underway,” Vittal had said during the July-September quarter earnings call.

In the last spectrum auction in 2022, the government had put a total of 72,097.85 MHz of spectrum for auction with a validity period of 20 years. Reliance Jio spent Rs 88,078 crore towards 5G spectrum, followed by Bharti Airtel at Rs 43,084 crore, and Vodafone Idea at Rs 18,799 crore.

Of the three companies, Vodafone Idea is yet to launch 5G services in the country, whereas Airtel and Jio are near completion of 5G rollout.

Recently, the department of telecommunications (DoT) also identified new bands in 37-37.5 GHz, 37.5-40 GHz, and 42.5-43.5 GHz. However, the same bands may not be brought under the upcoming auctions, as the Telecom Regulatory Authority of India (Trai) is yet to start the consultation process to set the reserve price for such bands.

The process could take Trai atleast six months that will include completing the consultation, and prepare its recommendation on auctioning the spectrum and fixing the reserve price, officials said.

The Union Cabinet in September 2021, decided that spectrum auctions should be normally held in the last quarter of every financial year.

The newly enacted Telecommunications Act, 2023, too paves for auction as preferred mode for spectrum allocation rather than for some key things such as satellite services, national security and defence, public broadcasting, in-flight connectivity, for BSNL and MTNL, among other areas, where spectrum will be allocated via administrative mode. Financial Express