InvestorQ : Is it true that Reliance Jio has paid nearly 60% of the total earnest money deposits for the 5G spectrum auctions?
Dilmini Mercia made post

Is it true that Reliance Jio has paid nearly 60% of the total earnest money deposits for the 5G spectrum auctions?

Answer
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Dawn Cherian answered.
4 weeks ago
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That is correct, in fact Reliance Jio Infocomm alone accounted for 64% of the total earnest money deposits paid by all the telecom operator auction participants. So, the big bang player in the auction is going to be Reliance Jio Infocomm. The 5G spectrum auctions are schedule to open on 26th of July and will close based on the demand and the response, which promises to be robust. The good news for the other telecom operators is that the Adani group is making a very small bid for 5G telecom spectrum with EMD of Rs100 cr.

Now let me turn to the actual earnest money deposits made by the participants. Out of the total earnest money deposit (EMD) by participating bidders of Rs21,800 crore, Reliance Jio Infocomm alone deposited Rs14,000 crore or 64% of total EMD. Bharti Airtel deposited EMD of Rs5,500 crore while the loss making Vodafone Idea has deposited Rs2,200 crore as earnest money. Among the four participants in the 5G spectrum auctions, Vodafone Idea is the only player with a hugel negative net worth of more than Rs-80,000 crore.

The earnest money deposit (EMD) entitles participating telcos to earn Bidder Eligibility Points (BEP). This BEP, in turn will determine how much these telecom companies can bid at the 5G spectrum auctions. The table below captures how much eligibility points each participant in the auction can earn via the quantum of EMD and therefore how much of bids that it can put at the auction. The eligibility points and the amount of bids it can put in the auction are directly proportional to the EMD amount. Check the table below.

Bidder

EMD Amount

Eligibility Points

How much it can bid

Reliance Jio Infocomm

Rs14,000 crore

159,830

Rs127,000 crore

Bharti Airtel

Rs5,500 crore

66,330

Rs48,000 crore

Vodafone Idea

Rs2,200 crore

29,370

Rs20,000 crore

Adani Data Networks

Rs100 crore

1,650

Rs700 crore

Adani Data Networks has confirmed it will not be participating in the auction for the public networks like the other players. Instead, its small EMD of Rs100 crore is intended to set up a captive network for its own establishments and especially to facilitate its data center activities, which is their latest foray. With this EMD, Adani Data Networks can buy spectrum worth Rs700 crore and therefore its bids are likely to be limited to the 26 GHz band. Bharti Airtel had fallen sharply on fears of Adani competition, but that is not happening this time.

During the 5G airwaves auction slated for the end of July 2022, the central government which owns the spectrum will garner revenues of Rs80,000 crore to Rs100,000 crore. It must be remembered that the fifth generation (5G) spectrum supports wireless internet access at a much higher speed compared to 4G and hence it is suited to data intensive activities. The 5G protocol is an essential ingredient to support data intensive projects like online streaming, artificial intelligence, machine learning and Internet of things (IOT) among others.

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