Indian telcos splash $10.6 billion on 4G spectrum, leaving 5G bands untouched

Indian telcos splash $10.6 billion on 4G spectrum, leaving 5G bands untouched

Indian telcos across the board ended the two-day spectrum auction on Wednesday by committing a combined $10.6 billion to bolster their 4G spectrum across the country.

The government-led auction saw operators purchase spectrum in several bands, the 700MHz spectrum, however, which can run 5G speeds, was left untouched due to its high reserve price.

According to the Indian government, operators will be required to make an upfront payment of 25 percent of the acquired spectrum in the 800 MHz and 900 MHz bands, and 50 percent of the rest of the bands. The outstanding sum is to be paid in 16 annual payments after a two-year moratorium.

Echoing the events of 2016, operators did not submit offers for these frequencies due to the high price of the band, while spectrum in the 2.5 GHz remained unsold. The government had lowered the reserve price for spectrum in the 700 MHz band by nearly 40 percent compared to the previous auction back in 2016.

India’s second largest service provider Bharti Airtel statement mentioned that the “the reserve pricing of these bands [700MHz and 3.5GHz] must be addressed on priority in future. This will help the nation to benefit from the digital dividend that will inevitably arise out of this.”

The telco further explained that the 700 MHz band “did not get any bid from the operators as it made no economic sense for them based on the high reserve price.”

It is worth mentioning that India’s providers spent liberally on 4G bands mainly due to several licenses approaching the end of its expiration term.

Airtel acquired 48.85MHz of spectrum in 800MHz and 900MHz bands for $1.2 billion; 86.6MHz spectrum in the 1800MHz and 2100MHz for $841.3 million and 220MHz spectrum in the 2300MHz band for $418.5 million, according to the telco.

“Airtel has now secured the pan-India footprint of sub-GHz spectrum that will help improve its deep indoor and in building coverage in every city,” the company statement said.

In parallel, Rival operator Vodafone Idea acquired spectrum in five circles, which it says will help it to “enhance our 4G coverage and capacity, enabling superior digital experience for our customers.”

However, the company failed to mention the circles in which it has acquired spectrum; the carrier already had one of the highest quantum of spectrum in the country.

Meanwhile, Reliance Jio acquired 4G spectrum in 22 circles across India in the 800 MHz, 1.800 GHz, and 2.3 GHz bands for a total of $7.86 billion, becoming the largest buyer of frequencies in the process. The telco said in a statement that it has increased its spectrum capacity by 55 percent to 1,717 megahertz and claimed to be the largest holder of spectrum in sub-GHz and 2.3 GHz band.

“With our increased spectrum footprint, we are ready to further expand the digital footprint in India as well as get ourselves ready for the imminent 5G rollout,” said Mukesh Ambani chairman of Reliance Industries, Jio’s parent company.

Ambani previously informed the media that Reliance Jio Infocomm is planning on deploying 5G services in Q3 of 2021; the chief exec confirmed back in July last year that his engineers had developed a “complete 5G system,” claiming that Jio the 5G kit would be ready for trials when spectrum is made available by the Indian government with deployment possible sometime in 2021.