Government receives Rs 30,000 crore more revenue than expected in the 2021 spectrum auction

2021 Spectrum Auction, the first day of 2021 spectrum auction ended successfully with a Rs 77,146 crore, DoT released the statement of bid received so far on the first day.

The auction of telecom spectrum worth Rs 3.92 lakh crore began on Monday. The First Day Revenue government was looking forward to receive was Rs 44,000 crore from bidding in the current financial year, considering the closing details of the first day of the 2021 spectrum auction.

A similar amount is expected in the coming financial year.

In the current auction, the government is selling a total of 2,308.80 MHz (MHz) of spectrum in seven frequency bands (700 MHz, 800, 900, 1800, 2100, 2300, 2500 MHz).

With any down payment of between 25 and 50 percent depending on these bands, bidders can pay in a period of 16 installments.

 Industry sources said that this did not include the 3,300–3,600 MHz bands intended for 5G, which could be auctioned off later in the next year.

The revenue target for communication services in the Union Budget 2020-21 was Rs 44,000 crore.

The government had only estimated bids of Rs 45,000 crore in this spectrum auction.

But the government received bids worth about Rs 77,146 crore from the three telecom operators who participated in the first day’s bidding exceeding the expectations at the auction.

Telecom Minister Ravi Shankar Prasad said bids worth Rs 77,146 crore had been received. He said the response to the bidding was better than the government had anticipated.

Union Information Minister Ravi Shankar Prasad said that airwaves sold in the 800 MHz band would contribute 50% of the revenue.

On the first day of the spectrum auction, 65% of the spectrum was sold in the 800 MHz band and 89% in the 2300 MHz.

Telecom Secretary Anshu Prakash said that after consulting with the Telecom Regulatory Authority of India (TROI), any spectrum sold at the current auction will be sold in the next bidding process. He suggested that the next auction – 5G – could take place in FY22.

Spectrum Auction 2021 First Day Highlights

 The 2021 Spectrum Auction is very innovative compared to the previous auction as the government has received good profits.

 In 2016, seven bidders participated. But now only three bidders, Reliance Jio, Bharti Airtel, and Vodafone Idea, have participated.

The government is currently auctioning spectrum in seven bands, namely 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, and 2500 MHz. Spectrum purchased by bidders at this auction is valid for up to 20 years.

Bidder Purchase Highlights

 89% of bidders purchased the 2300 MHz spectrum. Which received a 17% growth in revenue.

 The government also sold 38% of the spectrum in the 900 MHz band, 41% in the 1800 MHz band, and 9% in the 2100 MHz band.

 However, there were no buyers for the 700 MHz band. Keeping 700 MHz and 2500 MHz bands aside, 60% of the auctioned spectrum was sold.

The Union Minister said that legal action would be taken against TROI in connection with the 700 MHz band prices.

The government was able to sell 65% of the spectrum in the 800 MHz band when it came to the first day of the auction. It contributed 50% of the revenue.

Telecoms in India are using spectrum in the 800 MHz band for 4G services. Officials said the bidding process for the premium bands such as the 700 MHz and 2500 MHz could be completed by Tuesday or another two days.

The 700 MHz band, which is considered suitable for internal coverage, also went on sale at the 2016 auction.

The Telecom Regulatory Authority of India (TROI) has since slashed its price by 40 percent. The government earned Rs 65,789 crore in the 2016 spectrum auction.

700 MHz

‘The total spectrum value put up for auction is around Rs. 4 lakh crores. Of these, the 700 MHz band is the most expensive. It is valued at Rs. 1.97 lakh crore” Prasad said.

The 700 MHz band used for 5G services did not receive any response neither at the 2016 auction nor at the 2021’s first day of auction. He said the government would take appropriate action if it was not sold at the current auction due to the rate.

Prasad said the auction was taking place in a situation where the economy was being adversely affected by the effects of the coronavirus.

 Telecom Secretary Anshu Prakash said the 5G spectrum auction is likely to take place in the next financial year. 

Jio’s hold

Compared to 2016 only three private telecom giants participated in the auction this year i.e., Reliance Jio, Bharti Airtel, and Vodafone Idea, these companies have made an advance deposit (EMD) of Rs 13,475 crore.

Reliance  Jio has the highest has become the largest buyer of the Spectrum Auction. The company owns the rights to use spectrum in all 22 circles of the country.

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The auction was conducted by the Central Government Telecom Department. RJIL said it received a total of Rs 57,123 crore worth of spectrum. With this deal, the spectrum owned by RJIL increased by 55%. This was followed by Bharti Airtel’s spectrum worth Rs 18,699 crore.

Judging by the advance paid by Jio, the company seems to be planning to take up a significant spectrum in the face of the increasing number of subscribers.

RJIL has the highest sub-GHz spectrum in most circles. Not only this, the company has at least 2X10 MHz in the 1800 MHz band and 40 MHz spectrum in the 2300 MHz band in all 22 circles.

With this auction, the company achieved the required spectrum in each circle, with an average validity of 15.5 years.

RJIL bought the spectrum at Rs 60.8 crore per MHz. Jio users will also get a big benefit through this deal.

Now the company is expecting to provide the best telecom services to millions of new subscribers and old customers across the country.

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