The government added another ₹232 crore to its kitty from India’s first 5G spectrum auction on Friday, taking its total proceeds to ₹149,855 crore at the end of day four, driven entirely by the fight for the 1,800 MHz in UP (East) which ensured that the action will now move into day five.
The fourth day of the sale saw seven more rounds of bidding, with the per unit price of the 1800 MHz band increasing by 49% over its base price, to ₹ 135.6 crore for UP (East). The price jumped, said industry trackers, as Bharti Airtel fought with larger rival Reliance Jio to protect its market share in India’s most populous circle with some of its airwaves expiring in 2024.
Analysts estimate the outflow for the 1800 MHz band pan India has surged almost five times to ₹ 10,057 crore from the base price of ₹ 2,116 crore. At the end of Friday’s bidding, analysts estimated the spends for Jio to be over ₹ 84,000 crore, while Airtel’s spending is expected to be over ₹ 46,000 crore and that of Vi, to be around ₹ 18,500 crore. Day five with start from round 24, with some industry watchers expecting the sale to go onto Monday.
Bharti Airtel has 5 MHz of liberalised spectrum, or airwaves bought in an auction, in the efficient 900 MHz band and another 6. 2 MHz of unliberalised 900 MHz spectrum in UP-East, which is expiring in February 2024, said an industry executive. Unliberalised spectrum refers to those allotted administratively, or without auctions. “So, Bharti will be in a spot, post Feb 2024, as it will be left with just 5 MHz of liberalised 900 MHz spectrum, which won't be enough to compete with Jio, especially if the latter has acquired 10 MHz of 700 band in UP-East as well,” the executive said.
Hence, Airtel is engaging in a bidding war with Reliance Jio to prevent a business crisis by targeting an extra 5 MHz in the 1800 MHz band to defend market share in this key circle. More so since there is no 900 MHz spectrum on offer in this circle in this auction.
Currently, Bharti Airtel has 15 MHz of liberalised spectrum in 1800 MHz band in UP-East, while Vi and Jio have less -10 MHz each in this band. “The demand for spectrum in the UP-E service area of the 1800MHz band was for 15 MHz compared to 10.8 MHz on offer,” thus driving up the price, Credit Suisse said in a note.