5G spectrum auctions might not see a bidding war as there’s ‘enough’ for everyone

• 5G spectrum auctions are almost here after years of delay.
• With the AGR dues case behind them, telcos and the government are coordinating to address each other’s needs.
• Yet, 5G spectrum auctions may not offer the bumper harvest that 4G did.
• We decode all the reasons that telcos have to go slow with bidding for 5G spectrum.

The government has been pinning its hopes on a bumper earnings from 5G spectrum sale to bolster its revenues, but experts suggest it should temper its expectations and not expect a repeat of 4G spectrum auctions.

5G spectrum auctions are scheduled to begin on July 26, 2022.

All the three leading telcos – Reliance Jio, Airtel and Vodafone Idea – have tested their networks and demonstrated that they are 5G ready. But the government has been pushing back the auctions – to settle the ongoing issue of AGR dues.

India’s telecom ministry and regulator sprung into action to speed up the auction process. But, its first roadblock came in after the telcos petitioned the government for a 90% cut in base spectrum prices. However, the government cut them only by 40%.

The government is banking on spectrum auctions to fill its coffers, at a time when fiscal deficit in April and May has shot up to 12% of the budgeted estimate, as opposed to 8% in the same period last year.


The LIC IPO fizzled out, rising inflation and the Rupee hitting record lows in the last week resulting in a decline of billions of dollars in forex reserves – there are several reasons for the government to extract as much as it can from the telcos.

However, given the way 5G spectrum usage policies are shaping up, a bumper harvest like it was the case with 4G seems to be difficult.
Why the govt should not expect a bumper harvest from 5G spectrum auctions
The last major spectrum auction to take place was that of 4G spectrum in 2021 – this was after the telecom industry went through years of distress and consolidation after Jio’s entry in 2016.

The government scooped up ₹77,800 crore from the auctions despite only a third of the spectrum being acquired by telcos. Telcos bid for the spectrum strategically, too – with the bulk of the purchases made in the mid-range, which is capable of delivering speeds ranging from 100-900 Mbps.

“Don’t expect a bidding war. More than adequate spectrum is available for the three operators,” stated a report by JP Morgan.

That and getting less than the desired price cut leaves telcos with little motivation or the need to bid aggressively for 5G spectrum.


Private 5G networks could also play spoilsport
The government allowing private 5G networks – that is, companies like TCS, for instance, can run their own private networks by bidding for the respective category – has also raised the hackles of telcos.

COAI, the industry body representing telcos, has asked the government to impose ‘tough conditions’ for allowing private companies to run their own 5G networks.

COAI’s director general Dr SP Kochhar told Business Insider India that enterprises will likely contribute to 70% of 5G revenue, and if telcos can’t serve Big Tech, then they will have to draw up new business plans.

“Relatively high prices and the risk of dilution to telcos’ upside, with DoT approving direct allocation of spectrum to enterprises for deploying private networks, are negatives,” stated a report by IIFL Securities.

Essentially, the clients which telcos are trying to bag as 5G consumers, will turn into competitive bidders.
Spectrum sharing – sweetener for telcos, sour for the govt
Another reason why 5G spectrum auction could fizzle out is spectrum sharing – according to a report, TRAI is apparently considering allowing telcos to share airwaves.

This will solve two problems – first, telcos can monetize spectrum where they have it in excess, or if they need additional spectrum but don’t own it in a given circle, they can lease it from another telco. This should also alleviate liquidity concerns for the telcos involved.

Secondly, telcos will also be discouraged from having idle airwaves.

“But now with merely three players in the market with only two of them looking for serious investments, and the government's plan to offer spectrum through an annual schedule, there seems limited need to invest at a high price,” said a report by Motilal Oswal.


While spectrum sharing exists today, it’s restrictive and requires both the telcos to hold licenses in the same circle and frequency. TRAI is exploring the removal of these restrictions.

However, if this passes, the government may end up realizing even less money from auctions.

How telcos could bid for 5G spectrum

Analysts at IIFL Securities believe that telcos could go for only 4 out of 10 bands, with Jio and Airtel topping up their sub-GHz holdings.

For now, telcos are likely to focus on the crucial 850MHz and 900MHz frequencies, while the more expensive 600MHz and 700MHz frequencies might not see any action, the report added.

The mid-range, where telcos already hold over 670MHz spectrum, might not see any action.

Overall, the report concludes that telcos could bid for spectrum worth ₹71,000 crore – considerably lower than the ₹78,000 crore that the government scooped up from 4G spectrum auctions.

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