Spectrum auctions end with muted bidding amid strategy shift by telcos

Spectrum auctions ended on Wednesday with the Centre receiving bids worth just over ₹11,000 crore as Reliance Jio, the biggest buyer of pan-India 5G spectrum in the previous round of auction, limited its purchase of airwaves in only two circles: Bihar and West Bengal.

Bharti Airtel emerged as the largest spender in the auctions, spending ₹6,857 crore to consolidate their holdings in subGHz spectrum bands. Spectrum in the subGHZ bands is best suited for mobile broadband services. Vodafone Idea, despite struggling with financial issues, spent ₹3,510 crore to buy spectrum in 11 circles. Jio, which had bid over ₹88,000 crore in the previous auction, spent only 973 crore this time, largely because it already has sufficient airwaves pan-India to offer 5G services.

Bidding strategy

At the end of the auction, Gopal Vittal, MD & CEO, Bharti Airtel, said, “Airtel continues to judiciously acquire the right amount of spectrum to deliver the best possible experience to our customers. In this auction, we have bolstered our sub‐giga hertz and mid‐band holding, which will significantly improve our coverage, especially indoor coverage.”

Invigorated by its recent success with raising capital, Vodafone Idea acquired 30 MHz of spectrum across subGHz and mid-band (900 MHz, 1800 MHz, and 2500 MHz). Akshaya Moondra, CEO of Vodafone Idea, said, “VIL has strategically acquired spectrum in select markets to enhance and strengthen its overall spectrum portfolio.”

Both operators had spectrum up for renewal, which motivated their bidding strategy. 

Reliance Jio spent ₹973 crore to acquire the 1800 MHz spectrum in West Bengal and Bihar circles. In the leadup to the auction, the telco had posted the highest earnest money deposit of the three telcos. This is the first time that Reliance has not completely utilised its EMD in the auctions.

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Speaking on Jio’s spectrum acquisition strategy, Akash M Ambani, Chairman, Reliance Jio, said: “We have already demonstrated our commitment to the Digital India Vision by rolling out one of the world’s fastest and widest standalone 5G networks within 12 months of allotment of spectrum. This new spectrum acquisition will continue to enable us to serve the aspirations of the new India in terms of growing traffic demands and superior customer experience.”

Revenue Shortfall

According to the Department of Telecommunications, ₹11,340 crore of revenue was received through the auction of a total quantum of 141.4 MHz spectrum. This was below market expectations; furthermore, this is the lowest revenue generated through auctions in the last 10 years. Historically, it is the third-lowest auction in terms of revenue, with 2012 and 2013 occupying the second last and last places, respectively. 

In an indication of stabilisation in 5G capex amongst operators, the 5G spectrum bands, namely 26 GHz and 3300 MHz, were untouched by telcos. With telcos not acquiring additional 5G spectrum, the monetisation and necessity of a 5G network continue to be elusive. A top expert further added, “The low interest in the mid- and high-frequency 5G spectrum during the latest auction clearly signals the industry’s need for the government to open up lower frequency bands (700 and 600 MHz), which will generate more interest and revenue to meaningfully advance 5G infrastructure.”

Prashant Singhal, TMT Leader at EY, added, “The 2024 spectrum auctions concluded on expected lines. Operators have primarily bid for renewal spectrum and augmented capacity in select circles in the 900 and 1800 MHz bands. Given the visibility of the future spectrum auction roadmap, telcos are able to buy spectrum, which is required. Moreover, operators have adequate 5G spectrum for pan-India rollout.”