India's 5G spectrum auction is imminent, but telecom operators are not responding

According to India's Economic Times, the Indian government will auction 5G mobile communications spectrum on June 25, but there are signs that Indian telecom operators do not intend to invest huge sums of money in the bidding.

The report cited an unnamed industry analyst as predicting that the three qualified bidders listed by India's Department of Telecommunications (DoT) will commit to investing around 125 billion rupees ($1.5 billion) for the auction, a figure slightly lower than 13% of the reserve price set by the department.

This auction is of great significance to the Indian telecommunications industry. It will not only determine the quality and coverage of the country's mobile communications services in the future, but will also have a profound impact on the financial status of telecommunications operators and the market competition landscape. Therefore, the bids and strategies of Indian telecommunications operators in this auction have attracted much attention.

However, from the current situation, although the reserve price set by the Indian government is relatively high, telecom operators do not seem to be willing to blindly follow the bidding, but pay more attention to investment returns and long-term development. This also reflects the increasingly mature and rational side of the Indian telecom market, but also brings more uncertainties and challenges to future market competition and industry development.

Essentially, Indian telecom operators do not need additional spectrum at this point, especially considering the relatively low adoption of 5G in India. Hence, these telecom operators will not make unnecessary investments.

The report pointed out that the deposits in the form of bank guarantees (EMDs) submitted by three telecom operators, Reliance Jio Infocomm, Bharti Airtel and Vodafone Idea, have been significantly lower than in the past, which is seen as an indicator of weak market demand.

Among them, Reliance Jio submitted an EMD of up to 30 billion rupees (about 360 million US dollars), which is not only 10 times higher than the EMD submitted by Vodafone Idea, but also three times higher than the EMD submitted by Bharti Airtel. Therefore, there are rumors that Reliance Jio may use this advantage to obtain additional spectrum resources in the competition where competitors are trying to renew spectrum, which may trigger bidding on certain communication frequencies.

However, these forecasts are still highly speculative. In reality, the main purpose of the auction is to allow telecom operators to renew expiring spectrum and possibly fill some gaps with some new frequencies. Bharti Airtel and Vodafone Idea are facing urgent renewal needs, while Reliance Jio does not have this pressure.

Reliance Jio has just consolidated its position as India's largest mobile operator, with new regulatory data showing that the company added more than three times as many customers in April as its closest competitor, Bharti Airtel. The latest data from the Telecom Regulatory Authority of India shows that as of the end of September last year, Reliance Jio had 472.4 million mobile subscribers in India, with a market share of more than 40%. Bharti Airtel's market share was 33%, followed by Vodafone Idea, which ranked third with a market share of less than 19%.

When the official auction begins on June 25, the three telecom operators will bid for higher frequencies in eight bands: 800MHz, 900MHz, 1800MHz, 2.1GHz, 2.3GHz, 2.5GHz, 3.3GHz and 26GHz.

The Indian Ministry of Telecommunications had drawn up the auction plan earlier this year, setting a reserve price of just over 963 billion rupees, with plans to start the auction in May. However, the auction was postponed several times, first until after the Indian general election and most recently earlier this month for unknown reasons.