Impact of the 2024 Spectrum Auction on Competitive Dynamics and 5G Potential in India
The 2024 spectrum auction does not significantly alter market dynamics, with the quality and affordability of 5G services remaining the key determinants of future competitiveness.
On June 26, 2024, India concluded its 9th Spectrum auction since 2010. These auctions have allocated substantial spectrum across various bands to mobile operators, generating significant revenue for the government. This note aims to evaluate the competitive dynamics arising from the latest auction, assessing which operators are best positioned to deliver effective services and the implications for consumers. Additionally, we will discuss further steps the government can take to enhance mobile services for users and benefit the nation. Our analysis is grounded in hard data, ensuring that all conclusions are well-supported and transparent.
Auction Summary
The chart below summarizes the outcome of the 2024 spectrum auction.
Only 4 out of the 8 bands opened for auction saw any bidding, and even in these bands, a substantial amount of spectrum remained unsold. Bharti bid in 3 of the 8 bands, RJIO in 1, and VI in 3. The government raised ₹11,341 crore out of the ₹96,000 crore worth of spectrum it offered. Next, we will evaluate the competitive situation of the operators band by band, analyzing the services they can offer by aggregating the spectrum they acquired in this auction.
800 MHz Band
No bidding took place in this band during the auction. However, to fully understand the operators' capabilities, it is crucial to evaluate the existing allocations for both Bharti and RJIO in this band. Below is a snapshot of the current assignments. Additionally, note that RJIO holds 10 MHz of spectrum in the 700 MHz band, which was not included in this auction round.
The 800 MHz band is primarily used for 4G services and is generally not utilized for 5G. As operators focused on expanding their 5G services, they did not bid in this band, despite a significant amount of spectrum being available in various circles.
900 MHz Band
This band saw bidding activity from both Bharti and VI. To better understand the operators' capabilities to deploy services in this band, we will separate the allocations for Bharti and VI into two charts. We will color-code the operators' capabilities in each circle using Green, Orange, and Red, based on the amount of spectrum they hold. We will begin our analysis with Bharti.
900 MHz (Bharti’s Assignment)
The following chart illustrates Bharti’s spectrum assignment in the 900 MHz band.
Please note that Bharti holds 0 MHz in four circles (HA, MA, MP, & UPW). These gaps are compensated by its assignment in the 800 MHz band. When combining the spectrum in the 800 MHz and 900 MHz bands for analysis, Bharti has at least 5 MHz of spectrum in all 22 circles. However, the critical question is in which circles Bharti is capable of launching standalone 5G services, similar to RJIO.
The circles where Bharti is capable of this, indicated in green, are Assam, J&K, and North East, where Bharti has 15 MHz of spectrum. In these circles, Bharti can allocate 5 MHz for 4G subscribers and use the remaining 10 MHz block for deploying 5G, matching RJIO’s capability in the 700 MHz band.
Circles with only 10 MHz of spectrum present a challenge for Bharti. Ten MHz is insufficient for launching standalone 5G services. Moreover, reallocating all 4G subscribers from these bands to the 1800 MHz or 2100 MHz bands would significantly compromise the quality of 4G services.
900 MHz (VI’s Assignment)
The following chart illustrates VI’s spectrum assignment in the 900 MHz band.
VI holds spectrum in 17 of the 22 circles. Unlike Bharti, VI lacks spectrum in the 800 MHz band to compensate for any gaps. Therefore, our discussion will focus solely on these 17 circles to evaluate VI’s 5G capabilities.
Unfortunately, VI is currently unable to launch 5G services in any of these 17 circles as it does not possess a full 15 MHz block. VI’s strategy of acquiring small increments of 900 MHz spectrum in this auction suggests an intent to expand GSM services rather than data-centric technologies like 4G and 5G. This is evident as 14 of the 17 circles have spectrum allocations that are not multiples of 5 MHz, which are necessary for efficient deployment of 4G and 5G services. For example, VI holds 7.4 MHz in AP, 7.2 MHz in KA, 7.2 MHz in KO, 7.4 MHz in MP, 6.8 MHz in Punjab, 6.8 MHz in Rajasthan, 7.4 MHz in TN, and 6 MHz in WB.
These small increments of spectrum are more suited for GSM services, as attempting to deploy 4G in these blocks would result in suboptimal channel sizes and wasted spectrum. Hence, VI’s acquisition of spectrum in these bands indicates an expansion of 2G services in these circles.
1800 MHz Band
Similar to our analysis of the 900 MHz band, we will break down the 1800 MHz band operator-wise to gain a better understanding of individual capabilities. We will start our analysis with Bharti.
1800 MHz (Bharti’s Assignment)
The following chart illustrates Bharti’s spectrum assignment in the 1800 MHz band.
The following chart illustrates Bharti’s spectrum assignment in the 1800 MHz band.
Bharti's spectrum distribution in the 1800 MHz band is as follows:
In 9 of the 22 circles, Bharti has 20 MHz or more.
In 8 circles, it has between 10 to 20 MHz.
In the remaining 5 circles, it has 10 MHz or less.
In 3 of these 5 critical circles, Bharti’s position in the 900 MHz band is also weak:
Delhi: 7 MHz in 1800 MHz and 6 MHz in 900 MHz.
Gujarat: 10 MHz in 1800 MHz and 4.2 MHz in 900 MHz.
Kerala: 10 MHz in 1800 MHz and 4.6 MHz in 900 MHz.
In West Bengal, Bharti has 8.2 MHz in the 1800 MHz band and 5 MHz in the 900 MHz band. This is strengthened by an additional acquisition of 5 MHz in the 900 MHz band and 3.8 MHz in the 1800 MHz band.
Another critical circle is Mumbai, where Bharti's position in the 900 MHz band is weak, with only 5 MHz. However, this deficiency is somewhat compensated by 15 MHz in the 1800 MHz band.
In Maharashtra, MP, and TN, Bharti has only 5 MHz in the 800/900 MHz bands. It has tried to compensate for this with additional allocations in the 1800 MHz band.
In a nutshell, Bharti’s position in the low-frequency bands is weak in key important circles, and it has tried hard to compensate for this by using mid-band spectrum allocations.
1800 MHz (RJIO’s Assignment)
The following chart illustrates RJIO’s spectrum assignment in the 1800 MHz band.
Compared to Bharti’s 9 circles, RJIO has 20 MHz or more in 7 of the 22 circles. Notably, many of these are important circles where Bharti stands weaker. For example:
Gujarat: RJIO has 20 MHz vs. Bharti’s 10 MHz.
MP: RJIO has 20 MHz vs. Bharti’s 15 MHz.
Rajasthan: RJIO has 20 MHz vs. Bharti’s 15 MHz (Bharti bought 5 MHz in this auction).
UPE: RJIO has 20 MHz vs. Bharti’s 16.8 MHz.
West Bengal: RJIO has 20 MHz vs. Bharti’s 12 MHz (Bharti added 3.8 MHz in this auction vs. RJIO’s 9.4 MHz).
In circles where Bharti is ahead of RJIO in the 1800 MHz band (20 MHz vs. 10/15 MHz), these include AP, Bihar, HP, Karnataka, Kolkata, Punjab, and TN.
To summarise Bharti has compensated for its weakness in the 800/900 MHz bands by aggregating more spectrum in the 1800 MHz band. Consequently, its position is superior in some important circles compared to RJIO, as described above.
1800 MHz (VI’s Assignment)
The following chart illustrates VI’s spectrum assignment in the 1800 MHz band.
VI picked up only 1.2 MHz in the 1800 MHz band in this auction. Additionally, VI acquired small chunks of spectrum in the 900 MHz band, where its 1800 MHz position is moderate or weaker. Here’s a mapping of these acquisitions with VI’s 1800 MHz band position:
AP: 10 MHz in 1800 MHz, 2.4 MHz in 900 MHz (total 7.4 MHz in 900 MHz)
Karnataka: 15 MHz in 1800 MHz, 2.2 MHz in 900 MHz (total 7.2 MHz in 900 MHz)
Kolkata: 15 MHz in 1800 MHz, 0.2 MHz in 900 MHz (total 7.2 MHz in 900 MHz)
Punjab: 15 MHz in 1800 MHz, 1.2 MHz in 900 MHz (total 6.8 MHz in 900 MHz)
TN: 11.4 MHz in 1800 MHz, 2.4 MHz in 900 MHz (total 7.4 MHz in 900 MHz)
UPE: 10 MHz in 1800 MHz, 1.2 MHz in 900 MHz (total 6.8 MHz in 900 MHz)
UPW: 15 MHz in 1800 MHz, 6 MHz in 900 MHz (total 10 MHz in 900 MHz)
WB: 21.6 MHz in 1800 MHz, 3.8 MHz in 900 MHz (total 6 MHz in 900 MHz)
Notably, VI was on a respectable footing in most of the 1800 MHz circles where it bought small chunks of spectrum in the 900 MHz band. However, these small chunks cannot be used efficiently for the deployment of 4G and 5G services. Despite this, VI spent ₹3241.6 Cr on these acquisitions, a sizable amount, making its next-gen strategy unclear.
2100 MHz Band
Similar to our analysis of the 900 MHz and 1800 MHz bands, we will now dive into the 2100 MHz band to understand the operators' positions and capabilities. We will start our analysis with Bharti.
2100 MHz (Bharti’s Assignment)
The following chart illustrates Bharti’s spectrum assignment in the 2100 MHz band.
While evaluating the 2100 MHz band, we will focus on Bharti’s weaker circles where it has insufficient spectrum in the 800/900/1800 MHz bands. These circles include Delhi, Gujarat, Mumbai, Kolkata, Kerala, and North East.
Delhi: 6 MHz in 900, 7 MHz in 1800, and 15 MHz in 2100.
Mumbai: 5 MHz in 900, 15 MHz in 1800, and 5 MHz in 2100.
Gujarat: 4.2 MHz in 900, 10 MHz in 1800, and 15 MHz in 2100.
Kerala: 4.6 MHz in 900, 10 MHz in 1800, and 15 MHz in 2100.
North East: 15 MHz in 900, 10 MHz in 1800, and 15 MHz in 2100.
Kolkata: 7 MHz in 900, 20 MHz in 1800 (added 5 MHz in the current auction), and 0 MHz in 2100.
Bharti’s position is weaker in Delhi and marginally better in Mumbai due to the additional spectrum in the 1800 MHz band. In Gujarat and Kerala, its position is also not strong. In Kolkata, the situation has improved slightly with the addition of 5 MHz in the 1800 MHz band, but it still has 0 MHz in the 2100 MHz band.
To summarize, Bharti’s spectrum position in metros like Delhi, Mumbai, Kolkata, and Chennai is not as strong compared to RJIO. RJIO has 10 MHz in Delhi, 20 MHz in Gujarat, 10 MHz in Kolkata, 10 MHz in Mumbai, and 10 MHz in Chennai (TN) in 1800 MHz band, along with 10 MHz in the 800 and 700 MHz bands in all these circles. Additionally, RJIO has 15 MHz in the 800 MHz band in Mumbai.
2100 MHz (VI’s Assignment)
The following chart illustrates VI’s spectrum assignment in the 2100 MHz band.
We will map all the color codes in VI’s circles across the 900, 1800, and 2100 MHz bands to identify any weak links where all circles' tagged color codes converge.
AP: 7.4 MHz in 900, 10 MHz in 1800, and 5 MHz in 2100.
Bihar: 0 MHz in 900, 17.8 MHz in 1800, and 5 MHz in 2100.
Delhi: 10 MHz in 900, 10.6 MHz in 1800, and 5 MHz in 2100.
Mumbai: 11 MHz in 900, 10.2 MHz in 1800, and 10 MHz in 2100.
Kolkata: 7.2 MHz in 900, 15 MHz in 1800, and 10 MHz in 2100.
TN: 7.4 MHz in 900, 11.4 MHz in 1800, and 15 MHz in 2100.
Gujarat: 11 MHz in 900, 20.8 MHz in 1800, and 10 MHz in 2100.
Haryana: 12.2 MHz in 900, 15.8 MHz in 1800, and 15 MHz in 2100.
In summary, VI’s situation in critical circles is much better than Bharti’s, owing to its strong presence in the 900 MHz band.
2300/2500 MHz Band
We will skip the graphical part of the analysis, as the situation is straightforward.
RJIO leads with 40 MHz in all circles. Bharti follows with 30 MHz in 9 of the 22 circles and 40 MHz in the remaining circles. VI is on a weaker footing, with aggregated spectrum between 20 and 30 MHz. However, VI’s position is further compromised due to fragmented spectrum across and within bands, making its situation weaker in these bands.
3500 MHz Band
We will skip the graphical part of the analysis, as the situation is straightforward.
RJIO: Leads with 100 MHz in 14 circles and 130 MHz in the remaining 8 circles.
Bharti: Holds 100 MHz in all circles.
VI: Holds 50 MHz in 17 circles and 0 MHz in the remaining 5 circles.
While Bharti and RJIO are almost at par, VI cannot be discounted as the capacity of this band is largely unused, giving it potential leverage in the future.
26000 MHz Band
This band does not significantly impact the competitive dynamics of the market as it remains largely unused due to the substantial number of towers required for deployment, which incurs high costs, and the expensive devices needed to leverage it.
For the sake of record and completeness of the analysis:
RJIO: 1000 MHz
Bharti: 800 MHz
VI: Between 150 to 800 MHz in 16 of the 22 circles
Conclusion
In conclusion, RJIO holds a superior spectrum position, especially in the low-frequency bands (700 and 800 MHz). However, due to its deployment of standalone (SA) 5G, these bands are used separately for carrying RF signals that are not compatible with each other. Therefore, RJIO's spectrum situation should be evaluated based on the quality of its 5G services, primarily offered on the 700, 3500, and 26000 MHz bands, while its 800 MHz band is used for 4G services.
Bharti, on the other hand, has not deployed SA 5G, so all its spectrum bands are integrated. Its 5G offerings, however, are mainly in the 3500 and 26000 MHz bands. VI has yet to launch 5G, but its spectrum quality in the 900 MHz band is superior to Bharti's in key circles like Delhi, Mumbai, Gujarat, Haryana, Kolkata, Maharashtra, Kerala, and UPW.
Ultimately, the effectiveness of 5G services will determine the real competitive dynamics. If 5G fails to deliver the unique services it promises, the quantity of spectrum an operator possesses will be less significant. To run a high-quality 5G network, an operator needs at least 20 MHz of continuous spectrum in a single band, ideally 30 MHz. Currently, no operator in India has this, leading to potential congestion even for those with SA networks due to limited spectrum in sub-GHz bands, which are crucial for mobile phone services, especially indoors.
Therefore, the recent auction does not significantly alter the competitive dynamics of the market. The government holds a substantial amount of spectrum in the 600 and 700 MHz bands. To improve the quality of 5G services, these frequencies should be made available to operators at affordable rates. Only then will India and its operators be able to realize the true benefits of 5G. Until that happens, we can expect little change from the current situation.