India looks for $12 billion from spectrum sale, but telcos could have other ideas

But the likelihood of a massive state coffers-boosting auction is pretty slim, with industry watchers highly doubtful that India's telcos will be willing – or able – to spend big this time around.

The Department of Telecommunications (DoT) has detailed plans to begin the auction proper on 20 May, with would-be bidders having until 22 April to get their applications in. There is a total of 10,523.15 MHz of frequencies in eight bands up for grabs, carrying a reserve price of 963.18 billion rupees (US$11.64 billion), according to the country's Press Information Bureau. The DoT shared all the details in a lengthy auction document (here) for anyone keen to do the maths for themselves.

The spectrum is split between the 800 MHz, 900 MHz, 1800 MHz, 2.1 GHz, 2.3 GHz, 2.5 GHz, 3.3 GHz and 26 GHz bands. As one would expect, there are a host of rules and regulations governing eligibility to bid, auction format, spectrum caps and so forth. Spectrum will be licensed for a 20-year period, with no ongoing spectrum usage charges, and winning bidders may pay for their frequencies in annual instalments over those 20 years at an interest rate of 8.65%.

Those terms might not be enough to draw in the bidders but the government is naturally adopting an optimistic tone.

"Annual spectrum auction calendar is a major reform," India's Communications Minister Ashwini Vaishnaw posted on Twitter, referring to a recent government decision – as reported by the Economic Times – to hold frequency sales every financial year. "Now telecom service providers will get opportunity to buy spectrum regularly in a transparent way."

Should they want to, of course. India's telcos last shelled out significant sums for 5G airwaves as recently as August 2022; that sale saw the government bring in just over 1.5 trillion rupees ($19 billion), well over half of which – around $11 billion – came from Reliance Jio Infocomm.

Reliance Jio may well be the most deep-pocketed of the Indian operators, but it is not expected to throw much, if any, cash at this latest spectrum sale.

India's Business Standard quoted analysts at Axis Capital as saying they do not expect Jio to bid this time around, noting that it and rival Bharti Airtel have built out much of their 5G infrastructure, but 5G customers account for only around 20% of their overall subs bases and 5G network utilisation remains low.

Airtel and Vodafone Idea, or Vi, are widely expected to bid, since they have spectrum licence up for renewal via the sale.

Airtel will lead the bidding, Axis Capital predicts, putting an estimated figure of INR38 billion (US$460 million) on its spend, while Vi will commit INR25 billion to the process.

No complicated maths required to sum up that those figures don't come anywhere close to the government's total floor price. The biggest question around this upcoming auction is just how damp a squib it will prove to be.