They have to pay 25 per cent upfront for the 700, 800, and 900 bands and 50 per cent for spectrum won in the 1800, 2100, 2300 and 2500 bands and the rest across 16 annual instalments with a two-year moratorium.
While Bharti Airtel
and Vodafone Idea
have spectrum which is expiring in the 900 and 1800 bands, Jio has to replace spectrum only in the 800 band.
The biggest bill at base price will have to be forked out by Reliance Jio
— Rs 20,518 crore as 12 per cent (43.75 MHZ) of its total spectrum holding is coming for expiry. But it also has to buy more spectrum in this band (37.50 MHZ) to replace the airwaves which it was sharing with RCom which also comes up for expiry next year. Jio has to pay an upfront amount of Rs 5,130 crore.
is second in line and has to pay over Rs 13,800 crore as 10 per cent of its total spectrum holding which comes up for renewal.
As to Vodafone Idea, it has to pay Rs 10,000 crore because only 6 per cent of its spectrum is up for renewal. With spectrum available in plenty across all bands, telcos
are not going to indulge in aggressive bidding that could push prices up. Most of it could just end up at the base price. After all, the total spectrum on offer in the auction is nearly equivalent to the total spectrum held by the three operators since they started operations.
Moreover, with every possibility of the 5G spectrum auction for the 3500 and millimetre bands expected around the middle of next year (earlier than expected), most operators will conserve their cash for new technology which will determine their next line of growth.
That said, insiders at Reliance Jio
and Bharti Airtel
say they might buy some additional spectrum, especially in the 1800 and 2300 bands, to improve coverage of their 4G operations as networks are becoming clogged.
Cash-strapped Vodafone Idea
has not divulged its strategy but most analysts believe it is sitting pretty. It has the highest share of spectrum holding (30 per cent compared to Airtel’s 28 per cent and Jio’s 18 per cent) and only about 44 Mhz of spectrum comes up for renewal next year. In fact, Vodafone Idea might even return some spectrum to reduce its overall costs.
There is a consensus among the operators that no one will go for the 700 band because of the high base price tag. The initial price of the spectrum in this band was reduced by 43 per cent from the 2016 auction figure by Trai but most telcos say it is still unviable.
“The 700 band will be required for coverage of 5G and with no one bidding for it this auction, Trai will again have to offer it again when the 5G auction happens with a lower price as it did earlier. Depending on that price, everyone will take a call,” said a telecom executive.
The government expects to collect over Rs 390,000 crore from the auctioning of 2251 MHz of spectrum.
But it is aware that it will not get even a fraction of this figure because a lot of spectrum will remain unsold, especially in the 700 band which accounts for Rs 230,000 crore and where the bulk of the government revenue would come from.
The speed at which the auction takes place will determine whether the government can account it this financial year or whether it will spill over to the next. The government is expected to roll out the Notice Inviting Applications within a few weeks and the auction may take place in March. The Budget had estimated that the government would receive Rs 1.33 trillion from telecom revenues but it had not accounted for the Rs 32,000 crore bonanza from AGR dues.
Even so, the proceeds from the auction will surely help, particularly as the government moratorium on deferred spectrum payment for this year and the next means that about Rs 16,000 crore will not come to the exchequer.