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    Higher earnest money to allow Reliance Jio, Airtel to bid for all 4G bands

    Synopsis

    Vodafone Idea (Vi), financially the weakest of the three private telcos, is said to have put in less than Rs 500 crore, which would enable it to buy spectrum worth ₹2,500-3,500 crore, only in some bands and some circles.

    telecom 1Agencies
    At press time, Jio and Vi did not reply to ET’s queries. Airtel declined to comment.
    Kolkata | Mumbai: Reliance Jio is said to have deposited earnest money of over ₹9,000 crore, which would give it the option to buy 4G spectrum worth ₹45,000-66,000 crore in the upcoming March auction, underlining the telco’s need to renew expiring airwaves and add spectrum to cater to rising data consumption.

    Bharti Airtel, the second-largest operator, deposited ₹3,000-3,500 crore, which would allow it to buy 4G airwaves worth ₹15,000-25,000 crore, industry executives aware of the matter said.

    Vodafone Idea (Vi), financially the weakest of the three private telcos, is said to have put in less than Rs 500 crore, which would enable it to buy spectrum worth ₹2,500-3,500 crore, only in some bands and some circles.

    Jio and Airtel, by virtue of their higher earnest money deposits (EMD), would potentially be in a position to bid for spectrum in all 4G bands to be auctioned and in any circle, experts said.

    “Jio, Airtel or Vi would, typically, have the option to bid for spectrum worth roughly five to seven times their respective EMDs,” a senior executive of one telco told ET.

    At press time, Jio and Vi did not reply to ET’s queries. Airtel declined to comment.

    The deposits are part of the applications that the three telcos have filed to participate in the spectrum auction starting March 1. The quantum of EMD is indicative of a telco’s bidding strategy as it gives an operator eligibility points, based on which it can target a certain quantum of airwaves in specific circles.

    Higher Earnest Money to Allow Jio, Airtel to Bid for all 4G Bands

    The upcoming auction for over 2300 units of airwaves across seven bands – from 700 MHz to 2500 MHz – are valued at ₹3.92 lakh crore at the base price.

    However, analysts expect the government to generate less than ₹50,000 crore from the auction, in which the most expensive 700 MHz band may go unsold yet again, as it did in 2016.

    The deposits are line in with expectations that Jio – which must renew spectrum in the 800 MHz band that it owns and those of Reliance Communications that it uses – will be the most aggressive buyer, followed by Airtel, with Vi expected to show only marginal interest.
    Besides renewing expiring airwaves, Jio and Airtel are expected to bulk up on select 4G bands that can also be used to offer 5G. The auction rules were modified recently to allow telcos to offer new technologies such as 5G on existing 4G bands by giving six months’ notice. This saves them from waiting for the sale of airwaves in the 3300-3600 MHz bands earmarked for the next-generation technology.

    BofA Securities expects Jio to renew its 800 MHz spectrum and bulk up on capacity spectrum in the 2300 MHz band, while its sees Airtel bidding for airwaves primarily in the 1800 MHz band and some in the 2300 MHz band.

    Airtel chief executive officer Gopal Vittal recently said the telco’s bidding strategy would be calibrated to acquire pan-India holdings of sub-GHz spectrum that can be deployed for 5G.


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    ( Originally published on Feb 10, 2021 )
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