Reliance Jio makes biggest earnest money deposit for 5G auctions

Ahead of the 5G auctions, it is very clear that the big bang player in the auction is going to be Reliance Jio Infocomm. If you look at the earnest money deposit (EMD) by the various telecom companies that are pre-qualified to bid in the 5G auctions, then Reliance Jio Infocomm alone accounts for more than 50% of the total EMD paid. The 5G spectrum auctions are slated to happen later this month. In what could be a temporary relief for telecom operators, the Adani group is making a very small bid for 5G telecom spectrum.

The comfort for the other players came from the fact that Adani Data Networks had deposited a small amount of just about Rs100 crore, indicating that it is not likely to bid fiercely for spectrum. In fact, on the day the news was out that Adani would also bid for the 5G spectrum, the stock of Bharti Airtel had corrected sharply by more than 6%. This news would come as a major relief to the other participants. Apart from Reliance Jio Infocomm and Adani Data Networks; there is Bharti Airtel and Vodafone Idea also participating.

The total earnest money deposit (EMD) by the participating bidders amounted to Rs21,800 crore. Out of that, Reliance Jio Infocomm alone had deposited Rs14,000 crore accounting for 64% of the total EMD. Among the other companies participating in the 5G spectrum auctions; Bharti Airtel has deposited Rs5,500 crore as earnest money while Vodafone Idea has deposited Rs2,200 crore as earnest money. In comparison, Adani Data Networks has just about deposited Rs100 crore as earnest money deposit for the 5G spectrum auctions.

Normally, the amount of EMD made entitles the participating telecom company to Bidder Eligibility Points (BEP). The BEP will determine how much of a bid that these telecom companies can actually put in the auction for 5G spectrum. The table will give a picture.

Data Source: Department of Telecommunications

As can be seen from the table above, the Bidder Eligibility Points (BEP) is correlated to the EMD amount and the eligible bid amount, in turn, is correlated to the Eligibility Points.

Apparently, Adani Data Networks is not interested in participated in public networks like the other players. Its deposit of Rs100 crore is intended to set up a captive network for its own establishments and has admitted that it has no plans for now to enter the consumer mobility segment. Since Adani can buy spectrum worth just about Rs700 crore (refer table above), its bids are likely to be limited to the 26 GHz band in a few circles. One thing is clear that Adani is not going to be an aggressive bidder in the 5G spectrum auctions, this time.

The auction of 5G airwaves is scheduled to commence from July 26th onwards. The centre is expected to garner total revenues of Rs80,000 crore to Rs100,000 crore from the sale of the spectrum. What is unique about the fifth generation (5G) spectrum is that it supports wireless internet access at a much higher speed compared to the 4G protocol. The 5G protocol is considered essential to support highly data intensive projects in online streaming, artificial intelligence, machine learning, Internet of things (IOT) etc.