5G spectrum auction begins, government aims to raise more than Rs 96,000 crore

The auction for 5G spectrum to telecom service providers commenced on Tuesday. The Indian government is selling airwaves worth more than Rs 96,000 crore.

The Department of Telecommunications (DoT) is auctioning frequencies in the 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz, 2,500 MHz, 3,300 MHz, and 26 GHz bands. However, premium 5G airwaves in the 700 MHz band are not included in this auction due to supply shortages.

Spectrum acquired in this auction will be valid for 20 years. After 10 years, telecom companies can share, trade, lease, or surrender the spectrum.

Telecom companies will have the option to pay the full amount upfront or in EMIs with interest. The interest rate for deferred payments in this auction is 8.65 percent, higher than the 7.2 percent rate in the 2022 auction.

Payment options include part payments with corresponding moratoriums or payments in 20 annual installments, with the first installment due 10 days after the auction. Telecom companies can also pre-pay without penalty.

In this round of spectrum auctions, the DoT has excluded the 600 MHz and 700 MHz bands. The department has also increased reserve prices by 12 percent and 8.9 percent for the 3,300 MHz and 26 GHz bands, respectively. Spectrum prices were also increased by 11-14 percent in bands or circles that saw demand in the 2022 auctions.

Reliance Jio, Bharti Airtel, and Vodafone Idea have deposited a total of Rs 4,350 crore as earnest money.

Reliance Jio deposited Rs 3,000 crore, Bharti Airtel Rs 1,050 crore, and Vodafone Idea Rs 300 crore. Telecom companies can bid up to three to four times the amount deposited as earnest money.

The DoT has allocated eligibility points to Airtel at 7,613, Vodafone Idea at 2,200, and Reliance Jio at 21,363.

Companies whose licenses and spectrum expire in 2024 and who do not hold any spectrum acquired through previous auctions in a particular circle or band will be treated as “new entrants” in the sale.

Under the spectrum auction rules, the DoT has set the net worth eligibility for bidders at Rs 100 crore per LSA, with exceptions for Jammu & Kashmir and Northeast circles, where the net worth requirement is lower at Rs 50 crore.

Airtel needs to renew its airwaves in J&K, Odisha, Bihar, UP (East), West Bengal, and Assam. Vodafone Idea needs to renew its spectrum in the West Bengal and UP West circles.

The invitation for the spectrum auction was issued on March 8 this year, but the auction date was postponed twice. The auction was initially scheduled for May 20.