All you need to know about India’s biggest spectrum auction

Telecom companies are all prepared to battle it out on Saturday as the biggest ever spectrum auction for over 2,354.55 mega Hertz (MHz) of airwaves in seven bands -700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz and 2,500 MHz – worth ₹5.63 lakh starts on Saturday and will go on for a week.

This auction was originally scheduled for September 29 but was deferred by two days on the industry’s request that the auction be held during an auspicious period. Here are seven points that you should know about the auction.

1. The most sought after band will be the premium 700 MHz band, as it is being introduced for the first time. Interested buyers will have to shell a minimum of ₹57,425 crore for a block of 5 MHz on all-India basis.
2. The companies battling it out are- Reliance Jio, Bharti Airtel, Vodafone, Idea Cellular, Tata Teleservices, Reliance Communications and Aircel. Even though Reliance Communications and Aircel recently announced a merger, they are going to bid separately.
3. A total of ₹14,653 crore has been deposited as earnest money for the auction, with Reliance Jio alone submitting the highest amount of ₹ 6,500 crore. The EMD or Earnest Money Deposit gives an idea of a strategy to bid in specific circles and spectrum bands. Telecom companies have to deposit about 12% of the reserve price of the spectrum they are likely to bid for.
4. An aggressive bidding is not being speculated as per the EMDs. As many operators are reeling under high debts and a sharing of airwaves is expected. But Vodafone’s recent cash injection of nearly ₹ 47,000 crore into its Indian unit has raised the bar.
5. Airtel and Jio both have nationwide presence and they are expected to have the most fierce bidding, and since both will bid largely to deal with volumes, this may come as a bad news to consumers as it would mean a raise in internet and prices.
6. A revenue of ₹98,994.93 crore is expected from this auction and the government plans to use this to bridge the budget deficiet.
7. Telecom companies winning spectrum have to pay 25-50% of the bid money upfront, depending on the type of spectrum. The balance has to be paid in 10 years after a two-year moratorium.