5G spectrum auction starts; Jio, Airtel frontrunners

The country's much-awaited 5G spectrum auction has started today, with telcos like Reliance Jio, Adani Group, Bharti Airtel and Vodafone Idea participating in the country’s biggest-ever auction process of the high-frequency airwaves. The government is offering 72 GHz(gigahertz) of 5G airwaves worth ₹4.3 lakh crore, with a validity of 20 years. The 5G spectrum will allow companies to offer services with 10-times more speed than the current 4G technology.

Today's auction will be a simultaneous multiple rounds ascending (SMRA) e-auction process. As part of the mandate, the country's largest telco Reliance Jio Infocomm has made an earnest money deposit of ₹14,000 crore for the 5G spectrum auction.

Sunil Mittal-led Bharti Airtel, which is the second biggest telecom network service provider in India, has forked over the second highest amount as earnest money deposit (EMD) at ₹5,500 crore. The amount deposited by Airtel is around 40% less than Jio's EMD payment.

Embattled Vodafone Idea has furnished an EMD of ₹2,200 crore, despite a net worth of negative ₹80,918 crore.

Gautam Adani-led Adani Data Networks, which is the network service provider arm of Adani Group, has submitted ₹100 crore as EMD with the telecom department. As per the telecom department, all four pre-qualified bidders can bid in any band, in any LSA (subject to EPs/EMD/spectrum cap).

The Adani group is participating to provide 5G services to private network solutions. It plans to provide enhanced cyber security in the airport, ports & logistics, power generation, transmission, distribution, and various manufacturing operations. It has, however, clarified that its intention is not to be in the consumer mobility space.

Notably, the telco body COAI (Cellular Operators Association of India) earlier urged the government to not reserve any spectrum identified for the use of commercial services for private or captive networks.

Based on their deposits, Reliance Jio Infocomm, Bharti Airtel, Vodafone Idea and Adani Data Networks have been allocated 1,59,830, 66,330, 29,370, and 1,650 points, respectively.

Approving the 5G spectrum auction in June, the Cabinet had also decided to enable the development and setting up of private captive networks. This was done to spur new innovations in machine-to-machine communications, the internet of things (IoT), and artificial intelligence (AI) across automotive, healthcare, agriculture, energy, and other sectors.

Further, the Union Cabinet also reserved spectrum for BSNL for providing 5G services. The amount paid as EMD indicates the company's plan on how much spectrum it aims to buy in the auction.

The DoT had earlier released the names of these four applicants who applied to take part in today's 5G auction. In this spectrum sale, the auction will be held in the low-frequency bands of 600 MHz, 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, and 2,300 MHz; mid-frequency band of 3,300 MHz; and a high-frequency band of 26 GHz. The mid and high-band spectrum will be utilised by telecom service providers to the roll-out 5G tech-based services.

The successful bidders can make payments in 20 equal annual instalments, duly protecting the NPV (net present value) at the interest rate of 7.2%. The spectrum acquired through the auction can be surrendered after a minimum period of 10 years. As per the DoT, there will be no spectrum usage charges (SUC) for 5G spectrum acquired by telcos, which provides a significant relief to them in terms of the operating cost.

As per the government, the "5G services have the potential to create new age businesses, generate additional revenue for enterprises and provide employment arising from the deployment of innovative use-cases and technologies".