Reliance Jio has deposited the highest amount of ₹14,000 crore as earnest money deposit (EMD) for the upcoming spectrum auctions, followed by Bharti Airtel with ₹5,500 crore, Vodafone-Idea with ₹2,200 crore, and Adani Enterprises with ₹100 crore as EMD, indicating an aggressive bidding from incumbent operators in the upcoming 5G auction.
The auction of spectrum in the 600 MHz, 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHZ, 2500 MHz, 3300 MHz, and 26 GHz bands will start on July 26. A total of 72 GHz (gigahertz) of spectrum, worth at least ₹4.3 lakh crore, will be put on the block during the auction.
According to the list of pre-qualified bidders posted on the website of the Department of Telecommunications (DoT), these companies “can bid in any band in any licenced service area (LSA) subject to eligibility points (EPs)/EMD/spectrum cap”.
Earnest money deposit
An EMD is an assurance of payment by an operator to the government that gives a broad indication of the players’ appetite, strategy, and plan for picking up spectrum in an auction. It also determines the eligibility points, through which telcos target a specific amount of spectrum in a given circle. And, if the EMD is higher, the operator has the flexibility to put in larger bids for larger quantities of spectrum.
According to the DoT list, Reliance Jio has EPs of 1,59,830 which is the highest among the four bidders, followed by Bharti Airtel at 66,330 and Vodafone-Idea at 29,370. The newcomer, Adani, has 1,650 EPs allocated by the DoT.
The Adani Group will be participating in the auctions through their 100 per cent promoter-owned entity, Adani Data Networks Limited, a company with a net worth of ₹248.35 crore.
According to sources, Adani is likely to focus on millimetre (mm)-wave to set up private networks in selected areas across the country. The Gautam Adani-owned firm will also be focussing on certain LSAs as part of the applicant ownership details, for which the company has also received a letter of intent from the DoT to grant a Unified Licence for the Gujarat Circle.
However, with the DoT approving the allocation of 5G networks to enterprises and waiving off the entry/license fees for setting up captive networks (though the allocation methodology is yet to be firmed up), direct participation in the spectrum auction for captive use is a bit surprising, global market research firm Nomura said recently.
But, with Adani depositing only ₹100 crore as EMD, its participation will be limited to select circles out of the total 22 circles, which should be enough to create private network solutions. Aggressive participation across a higher number of circles remains a key risk, said analysts.
“It (Adani) does not plan to enter the consumer mobility space, but provide private network solutions, along with enhanced cyber security at airports, at ports, and in its logistics operations—in power generation, transmission, and distribution—and at its various manufacturing operations,” Motilal Oswal said in its recent report.