Based on the quantum of earnest money deposits, it looks like the Reliance group could end up with the most airwaves once the auctions are done
Mukesh Ambani-owned Reliance Jio has deposited Rs.14,000 crore as earnest money for the 5G spectrum launch, making it quite obvious that they could walk away with the maximum airwaves when the bidding opens on July 26.
The Department of Telecommunications (DoT) shared details of the earnest money deposits made by companies seeking to participate in the bidding process and besides Reliance Jio, the others include Airtel, Vodafone and Adani Data Networks. As pointed out by us, the Adani Group had the lowest earnest money of just Rs.100 crore, which proves that they were indeed only interested in spectrum for captive use.
More details of the auction
The government is auctioning 72 Ghz of spectrum for a period of twenty years which is said to be cumulatively worth around Rs.4.3 lakh crore at base price. Frequency bands going on sale range from 600 Mhz to 2500 Mhz on the low end, 3.3 to 3.67 Ghz on the mid-end and 26 Ghz on the high end.
Among the other bidders, Airtel deposited earnest money worth Rs.5,500 crore that could possibly ensure that it can acquire spectrum across a pan-India level whereas the cash-strapped Vodafone Idea (VI) actually surprised us by submitting Rs.2,200 crore suggesting that they could acquire 5G airwaves in priority markets and in limited quantities.
What does earnest money denote?
Sources in the department believe that the deposits also appear to indicate that the spectrum would be sold close to the reserve prices with demand estimated to be in the range of $13 billion to $20 billion on the lower end to $54 billion on the upper end. Most of the activity could be centered around the C-band (mid-range) given that the 5G ecosystem revolves around it.
The auction, which will kick off on July 26, will feature 72 Ghz of spectrum. All four applicants in the fray have made earnest money deposits amounting to Rs.21,800 crore, which represents a major spike from the Rs.13,475 crore that was deposited during the 2021 auction between the then three competitors.
Industry observers tell us that a telecom company’s ability to bid for radio waves is usually seven to eight times the earnest money deposited by them, though players do keep some headroom to deal with surprises in specific circles. Based on the latest numbers Reliance Jio can bid for Rs.1.27 lakh crore as against Airtel’s Rs.48,000 crore and Vodafone’s Rs.20,000 crore. The Adani Group could go as much as Rs.700 crore.