Govt may fall short of achieving airwave auction target, say experts

As the government buckles up to start the auction of airwaves, this tender bears some resemblance to the previous round of auctions in 2016. 

Like 2016, experts believe the government may fall short of garnering the targeted amount from the tender. This is because the sector may not have enough players for participation and the ones that would be there may not have the desired appetite. 

“There are only three players and Vodafone Idea is not in a position to participate aggressively in the auctions while Bharti Airtel is in a comfortable position even without the auctions. Only Reliance Jio requires the airwaves and would be keen to participate,” said an analyst.

He said that exclusion of 5G spectrum in the upcoming auctions will not prove beneficial for the sector or the country as India will miss the 5G bus.

On December 16, the Union Cabinet approved conducting a 4G auction that is expected to fetch the exchequer Rs 3.92 trillion by offering 2,251 MHz airwaves.

The auctions are slated to be held in March 2021, over four years after the last spectrum auctions in October 2016. In the previous bidding, the government earned Rs 65,789 crore.

The bands that have been put on offer are 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz and 2,500 MHz.

Currently, Airtel and Vodafone Idea have 4G spectrum pan Indian, and spectrum availability is also adequate in most circles. In 2016, Airtel, Vodafone and Idea were trying to complete their 4G spectrum across all circles. They were then bidding for 4G spectrum in 1,800 Mhz and 2,100 Mhz bands, where they did not have 4G spectrum.

“In 2016, the financial condition of all operators was much better than what it is now. The number of operators contesting the auctions was much higher in 2016. Also, all the three operators present now had completed their need for 4G spectrum at that time,” said Anil Tandan, an independent telecom analyst.

Merger of Vodafone and Idea Cellular and that of Airtel with Aircel happened in the last four years.

Tandan added, “Like in 2016, 700 Mhz would remain unauctioned because of its high price and since all the three operators already have low-band spectrum in 900 Mhz or 800 Mhz. It is being used or refarmed to 4G. Thus, there is no need for 700 Mhz for them for 4G.”

Experts believe that Reliance Jio is expected to lap up spectrum in the 800 MHz band as its licence is expiring and the company would want to have 10 MHz of spectrum in each circle. Both Bharti Airtel and Vodafone Idea may buy spectrum in the 900 MHz band and may even go for some additional airwaves in 1,800 MHz.

The industry had been pitching for 4G auctions as some licenses in the bands were expiring in 2021.

The Digital Communications Commission, the apex decision making body of the department of telecommunications, in May, approved the spectrum auction plan subject to Cabinet approval. MSTC has been selected to handle the spectrum auction.