As expected, both Reliance Jio and Airtel emerged as the biggest spenders in India's first 5G spectrum auctions
As expected, the union government reaped a windfall from the 5G spectrum auctions, netting over Rs.1.5 lakh crore in the week-long exercise that also saw Reliance Jio strengthen its position as the top player in the telecom sector with Bharti Airtel being a close second.
After over 40 rounds during the past seven days, Reliance Jio acquired 24,740 MHz of 5G spectrum for which it paid a massive Rs.88,078 crore. Not only does this place the Ambani group company in the envious position of having contributed close to 60% of the auction earnings, it also resulted in the company getting ensconced as the premier player.
Second in line was Bharti Airtel, which acquired 19,867.8 MHz of 5G airwaves, having spent just about half of what the Ambani group company did. It coughed up Rs.43,084 crore at the auctions which also saw Vodafone Idea invest Rs.18,799 crore to purchase 6,228 MHz of spectrum, ostensibly to bolster up geographies where it has some subscriber base.
Official data says Adani Data Networks spent Rs.212 crore to acquire 400 MHz of spectrum across six cities in the 26 GHz band. The Adani Group company has made it known that the acquisition is purely for captive network needs. However, one cannot rule them out of the race if Vodafone Idea wants to exit for any reason tomorrow.
Has Jio spent more than it should?
From Jio’s point of view, the auctions couldn’t have gone better as it acquired the super efficient 700 MHz band plus the 1800 MHz band in eastern UP. It also won the 10 MHz band in the circle after a battle with Airtel by paying over 80% more than the base rate. However, it is the purchase of the 700 MHz waves across India that could take Jio above the rest.
Having stepped into the highly competitive and expensive telecom sector with the cheapest of offerings, the powers that be at Jio appear to have changed track now. The 700 MHz spectrum gives it the power to chase top-end customers and revenue share, given that the quality and the coverage of these airwaves were the best on offer.
In addition, Jio also acquired most of the airwaves in the C-band (3.3-3.67 GHz) and 26 GHz bands that makes it the strongest player in the pan-India 5G network. This ensures that the company would be in a better position to withstand sudden spurts in data consumption, especially having secured more spectrum in the 800 MHz to 1800MHz and 2300 MHz bands.
“Jio is committed to offering world-class, affordable 5G and 5G-enabled services. We will provide services, platforms and solutions that will accelerate India’s digital revolution, especially in crucial sectors like education, agriculture, healthcare, manufacturing and e-governance,” Akash M Ambani, Chairman, Reliance Jio, said in a statement.
Bhartil Airtel plays the game it always did
As for Bharti Airtel, the company stuck to its policy of acquiring spectrum assets at lower costs but in circles that it anticipates highest growth. It stayed away from 700 MHz and instead pitched for acquiring airwaves in the 1800 and 2100 MHz bands. The company hopes to deliver 7-8 Mbps speeds using these airwaves, up from the 3 to 4 Mbps speeds it now delivers.
Airtel acquired 5G spectrum in the 3.3-3.67 GHz and 26 GHz bands and did selective refills in 900 MHz, 1800 MHz and 2100 MHz frequencies for a pan-India 5G coverage. “The acquisition of this vast amount of spectrum strapped on to an already industry best existing pool of spectrum will mean that the company does not need to spend any material sum on spectrum for many years to come. In addition, this spectrum acquisition has enabled Airtel to drastically reduce the payout towards spectrum usage charge (SUC) and eliminate the adverse SUC arbitrage compared to new entrants,” Airtel said in its statement.
“This spectrum acquisition at the latest auction has been a part of a deliberate strategy to buy the best spectrum assets at a substantially lower relative cost compared to our competition. This will allow us to raise the bar on innovation and address the emerging needs of every discerning customer who demands the best experience in India,” said Gopal Vittal, MD & CEO (India & South Asia), Bharti Airtel, in a statement.
Where does all of this leave Vodafone Idea?
The story around Vodafone Idea is quite a pathetic one though. The beleaguered company could see more trouble in the future as its competitors have now put a wide distance with the latest auction. The company seems to have invested its moderate resources only to acquire enough to be able to service its existing customers in key geographies.
“We have successfully acquired mid-band 5G spectrum (3300 MHz band) in our 17 priority circles and mmWave 5G spectrum (26 GHz band) in 16 circles, which will enable us to offer a superior 5G experience to our customers as well as strengthen our enterprise offerings and provide new opportunities for business growth in the emerging 5G era,” Vodafone Idea said in a statement.
So, what’s next on the agenda?
For starters, union minister Ashwini Vaishnaw was a happy man. As against the expectations of about Rs.80,000 crore, the auctions have brought in substantially more into the government coffers. Definitely this (auction) result is better than what was anticipated by everybody, all the stakeholders, including the industry and the investors,” he told reporters after the auction ended.
The minister said all the auction formalities that include actual allocation of the spectrum would be completed within the next ten to twelve days. He was of the view that companies could start offering 5G services to customers by October.
The minister said he expects the telecom companies to invest between Rs.2 lakh crore to Rs.3 lakh crore over the next couple of years in upgrading the networks, preparing 5G rollouts and enhancing the quality of services. The 5G rollout would increase employment levels by as much as 100 million in this time frame via both direct and indirect projects.
Finally, the minister was of the view that mobile phone subscription charges would remain quite affordable even when users move to 5G. “As per the ITU (International Telecommunications Union) affordability index, we are among the most affordable telecom services with the highest affordability. I think that trend will continue.”