Seven Indian telecom operators have reportedly deposited earnest money of about Rs 15,000 crore for the upcoming spectrum. Mukesh Ambani-led Reliance Jio has filed the highest earnest money deposit (EMD) — around Rs 6,500 crore, indicating that the new 4G entrant may aggressively bid for radiowaves despite being one of the leading telcos in terms of spectrum holdings.
Bharti Airtel, Vodafone India and Idea Cellular made deposits of around Rs 1,980 crore, Rs 2,745 crore and Rs 2,050 crore, respectively. Tata Teleservices made a deposit of over Rs 1,000 crore, followed by Reliance Communications and Aircel with Rs 313 crore and Rs 120 crore EMD, respectively, according to media reports.
These telecom operators had filled earnest money deposit Rs 20,435 crore for the previous year’s spectrum auctions.
“Going by (rough) calculations of EMDs, the government could sell airwaves worth Rs 1.5 lakh crore just at the reserve price, which could translate into upfront payment of at least Rs 55,000 crore,” a senior official was quoted as saying by the Economic Times.
EMD is indicative of a company’s strategy to bid in specific circles and spectrum bands. It gives them eligibility points with regard to those circles. EMD is typically pegged at about 10% of the reserve price of airwaves in each circle. A PTI source however said the EMD cannot be linked to the scale of bidding.
The mega spectrum auction is slated to start October 1 where airwaves worth Rs 5.63 lakh crore will go under the hammer. The government is selling mobile frequencies in all bands — 700 Mhz, 800 Mhz, 900 Mhz, 1800 Mhz, 2100 Mhz and 2300 Mhz — in the upcoming auction. Spectrum in these bands can be used for high-speed 4G services.
The finance ministry in the Budget pegged the revenue target at Rs 98,995 crore from the telecom space, which includes Rs 64,000 crore from the auction of about 2,354.55 Mhz of spectrum and the rest from various levies and services this financial year.
This is the first time the government will auction premium airwaves in the 700 Mhz band, which is considered as the most premium as the cost of providing service is one-third of 3G under the 2100 Mhz band.
The ET report further said that Jio could well buy some spectrum in the 700 Mhz band given the deposit, while Bharti Airtel could pick up 700 Mhz spectrum in certain circles — Uttar Pradesh East and West and Bihar —where prices are relatively low.