Govt nets ₹11,340 crore from spectrum auctions, third lowest since 2010

India’s spectrum auction ended on Wednesday after seven rounds, with the government collecting ₹11,340.78 crore—the third lowest since competitive bidding began in 2010—from selling 141.4 units of airwaves.

The government had put up 10,523.2 MHz of spectrum worth ₹96,320 crore on sale, but managed to find buyers for just about 1.3% of the total radio frequencies on offer, the lowest since 2010. Yet, for the government, the auction results were on expected lines.

Proceeds from spectrum auctions were the lowest in 2013 when the government collected just ₹3,639 crore and the second lowest was in 2012 when it garnered ₹9,407 crore. This year's spectrum sale collections are the lowest in a decade since 2014, when the government had received ₹61,162 crore.

“Spectrum auction 2024 was part of a continuous allocation process that is transparent, robust and progressive. Telecom service providers have taken spectrum not only for continuity of service but for expanding their services, but the volume is limited because already a large part of the spectrum required was auctioned only last year (2022),” minister of communications Jyotiraditya Scindia said in a statement after the auctions ended.

“We will continue the process with the clear objective of ensuring reliability and growth of telecom services in India,” he added. The department of telecom (DoT) will issue the letters of allocation in the coming days which will be followed by handover of spectrum to the carriers.

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Bharti Airtel was the largest buyer of spectrum this time around, purchasing 97 MHz for ₹6,857 crore, data from the DoT showed, while Vodafone Idea and Reliance Jio bought 30 Mhz spectrum worth ₹3,510.4 crore and 14.4 MHz worth ₹973.62 crore, respectively.

Officials aware of the details said that the auction results were above expectations as the department had estimated bids worth a maximum of ₹10,000 crore. Further, a majority of the airwaves bought—87 MHz worth about ₹6,000 crore—were additional spectrum needed for improving services, which sent the bids above expectations.

The officials also added that this year’s auction should not be seen as a trend for future sales, since the carriers had tanked up on spectrum in the 2022 auctions where they bought 72,000 Mhz for a record ₹1.5 trillion, which was yet to be exhausted. “This year’s auction cannot be considered as a benchmark, because demand and supply changes every year. In the previous auction, telcos bought over 10Ghz of spectrum and this year, for instance, 99% of the airwaves did not see any demand. As the telcos build out their coverage and rollouts become aggressive, the demand for 5G spectrum will also rise in the next auctions,” one of the officials said, asking not to be named.

Telecom companies have the option to pay a partial amount or the full amount upfront or split them into installments of equal amounts over 20 years on which interest of over 8% is applicable. This means that the first installment from the total auction proceeds in FY25 could be as little as ₹567 crore. A second official said that the telecom department had accounted for ₹500 crore as proceeds from auction installment in FY25. “We will get a slightly higher amount than our estimates,” he noted.

Officials added that 54 Mhz was bought for renewing spectrum that had expired earlier this year. The telcos had been granted provisional spectrum which will be valid till the time of the allotment of renewed spectrum.

Bharti Airtel, India’s second-largest carrier by subscribers, said in a statement that it acquired 97 MHz spectrum in 900 MHz, 1800 MHz and 2100MHz frequency bands. It successfully renewed spectrum that was expiring in six circles in 2024 and bought additional spectrum to bolster its mid-band holding across key circles. It did not specify the circles in which additional spectrum was bought.

From the total, Bharti Hexacom Ltd. has acquired 15 MHz with an outlay of ₹1,001 crore.

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Gopal Vittal, MD & CEO, Bharti Airtel, said, “Airtel continues to judiciously acquire the right amount of spectrum to deliver the best possible experience to our customers. In this auction, we have bolstered our sub‐giga hertz and mid‐band holding which will significantly improve our coverage, especially indoor.”

In a separate statement, Akshaya Moondra, CEO, Vodafone Idea, said that the carrier had strategically acquired spectrum in select markets to enhance and strengthen its overall spectrum portfolio. “This acquisition will enable us to effectively use dedicated sub GHz spectrum towards advanced technologies to enhance the experience we offer to our customers. As VIL embarks on its growth journey with the fund-raising plan in place, this spectrum acquisition will further strengthen its competitive position in the market,” he said.

Vodafone Idea bought airwaves in 900 MHz spectrum in UP West and West Bengal circles, and added to its holding in seven circles of Andhra Pradesh, Tamil Nadu, Karnataka, Punjab, Rajasthan, UP East and Kolkata, aimed at enhancing experience of its 4G customers. In circles of Andhra Pradesh, Tamil Nadu (excluding Chennai), Punjab and large parts of Karnataka and Uttar Pradesh (East), 4G on sub-GHz 900 band will be offered for the first time which will result in better coverage and experience, it said.

The company has also acquired 1800 MHz spectrum in Madhya Pradesh and 2500 MHz spectrum in Bihar, which will help in increasing the network capacity quickly.

India’s largest telecom service provider Reliance Jio said it acquired 1.4 Mhz of additional spectrum in the 1800 MHz band in Bihar and West Bengal. Bihar and West Bengal were the only circles to see final auction prices above the base price in the 1800 MHz band.

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Akash M. Ambani, chairman, Reliance Jio Infocomm Ltd., said, “...this new spectrum acquisition will continue to enable us serving aspirations of the new India, in terms of growing traffic demands and superior customer experience, which is no longer limited to only urban markets...”

Analysts tracking the sector said that telcos buying additional airwaves meant better services for consumers, even if the revenue to the government was not significant.

Shashank Mishra, partner, Shardul Amarchand Mangaldas & Co, said that telecom companies have bid to renew their expiring spectrum and to further expand their existing 5G coverage. “This would mean better quality of service in some areas and continued spectrum coverage for the large part by these telecom companies. It also demonstrates that the larger 5G ecosystem needs to be nurtured to drive up demand. From the government’s point of view, it seemed like another push towards wider adoption of 5G without leading to a significant addition in its revenue,” he said.

The spectrum auction saw mid-bands in 900 MHZ and 1800 MHZ getting major traction as it will help operators to continue with 4G re-farming and 5G expansion. “Airtel's choice of circles has resulted in ~70% of total spectrum committed, which is focused on expanding its footprint for better 4G/5G coverage. Operators will have to commit to the first outflow within 10 days. Accordingly, from an outflow perspective, equal instalments across 20 years and interest on deferred payments will require operators to focus on faster rollout and utilization of the bands,” said Purushothaman KG, partner and head – technology transformation & telecom at KPMG India.