Telecom Spectrum Auction:

On day two, India’s telecom spectrum concluded its auction prematurely, thus portraying a subdued response relative to that of 2022 blockbuster sale. In this year 2024, only 12% spectrum was sold, indicating telecom companies emphasis on renewals and some acquisitions meant for coverage improvement and service delivery quality enhancement only. This article scrutinizes the auction process, the different frequencies available for sale, who participated at what price points among other factors affecting telecommunication sector in India.

Also Read

Overview of the 2024 Spectrum Auction:

The year 2024 auction was delayed for about two years but finally its terms came out; with 800 MHz to 26 GHz ranges being offered at auctioning tables containing 10 GHz lots in all. Though Indian authorities set their entry point at ₹ 96,238 crore there were only bids of ₹ 11,340 crore coming through during the sale day alone on which just a few hours saw the conclusion stage being reached at 11:30 am on day two.

Frequencies Available for Sale:

This exercise saw various bands being auctioned such as 800 MHz, 900 MHz, 180 MHz, 210 MHz, 230 MHz, 250 MHz, 330 MHz, 26000 MHz among others but significant activities took place within 900 MHZ alongside 180 MHz ones while some circles reported less than a dozen bidders in 210 MHz strips. In total 140-150 MHz were sold in seven rounds.

The spectrum auction held to meet new spectrum requirements of Telecom Service Providers and for renewal of expiring licenses for the continuity and growth of mobile services has concluded successfully.

Ministry of Communications says all the available spectrum in the 800 MHz,… pic.twitter.com/GJmTt8bzKo
— All India Radio News (@airnewsalerts) June 26, 2024

Key Players in the auction and their strategies:

Bharti Airtel:

Meanwhile Bharti Airtel took in more spectrum at 700 crores including 97 MHz in 900 MHz, 180 MHz and 210 MHz frequency bands. This also involved a renewal process for expiring ones scheduled for 2024 leading to service improvement and continuity. Additionally, Bharti Hexacom Ltd – a unit of Bharti Airtel – got 15 MHz at 100 crores.

Earlier this month Bharti Airtel paid 7904 crores as spectrum auction dues to the Department of Telecommunication (DoT) covering all liabilities that were due from the 2012 and 2015 auctions.

It should be noted that the quantum and the fact that both private and public sector participants were involved is what makes debt restructuring so challenging for policy makers in India and elsewhere. The other differed payment that was completed this month included that of 2015 spectrum auction at 10 percent. This incline took place because these two years ran parallel within which dues had not been discharged.

Reliance Jio and Vodafone Idea:

Similarly Reliance Jio, Vodafone Idea Ltd where other telecom operators at the auction who were selective in their bids by focusing on improving their spectrum portfolio in the mobile broadband space based on available market intelligence’. For Jio however they already have enough 4G and 5G bands hence only selective bidding was expected. Jio is believed to have paid one thousand crore rupees to get some 180 MHz band frequencies for specific areas.

Vodafone Idea also strategically participated, focussing on renew spectrum in circles where it was expiring. At the auction, telecom companies submitted low earnest money deposits (EMD), thereby reflecting their selective appetite for radio waves; Jio placed the highest EMDs worth ₹3,000 crore followed by Bharti Airtel customers at ₹1,050 crore and Vodafone Idea Ltd.’s at ₹300 crores.

The comparison with the 2022 Spectrum Auction:

In 2022, the spectrum auctions attracted ₹1.5 lakh crore bids over seven days, breaking all previous records due to 5G introduction in airwaves. During this particular auction, Mukesh Ambani’s Jio bid most as it took nearly half of the total airwaves which cost ₹88,078 crore. Sunil Mittal’s Bharti Airtel also acquired spectrum for ₹43,084 crore while Vodafone Idea paid ₹18,799 crore to acquire its own allocation.

In contrast, activity and amounts of bids in 2024 were much lower. The total bids of ₹11,340 crore were far away below the reserve price of ₹96,317 crore for the available 10,523.15 MHz spectrum. This is a significant difference in how telcos are now focused on strategic renewals as well as selective spectrum enhancements instead of aggressive acquisitions we saw some years back.

Implications for the Telecom Industry:

The subdued response towards the 2024 spectrum auction reflects a shift from what it used to be, in terms of acquisition approach by these companies in the industry. Rather than going for large scale takeovers, telecommunication companies opt to choose strategic renewals and targeted spectrum additions so as to enhance coverage as well as improve service quality.

The fact that the event was low key represents the current health of the industry financially with cautiousness in investments applying there as well. Telecom companies have adopted a more measured approach to spectrum investment due to the high costs associated with previous spectrum purchases and the ongoing rollout of 5G services.

Future Outlook:

Even though the outcome of 2024 spectrum auction was below expectations; this acquired spectrum will be crucial in improving coverage quality and services offered by mobile networks in India. Focus on renewing expiring spectrum; strategic acquisitions shall ensure continued provision of dependable high speed mobile services by telecommunication providers.

At the same time rapid deployment 5G services country wide will stimulate more investment into network infrastructural and technological upgrades for better connectivity and speed among other benefits. The growing demand for high speed data plus increased connectivity capacity drives a continued growth trajectory for the industry.

Conclusion:

The emphasis that was placed on renewal and partial upgrade instead of total acquisition characterised the telecom industry’s shift in strategy during the 2024 bidding exercise. Bharti Airtel emerged as the largest overall bidder, securing critical spectrum to bolster its mid-band holdings and ensure continuity of service. This was below government expectations but would contribute significantly towards expanding mobile service coverage across India. As industry evolves, strategic spectrum investments will play crucial role towards satisfying ever increasing need for high speed data services while ensuring robust digital India.