Reliance Jio ups the ante as Adanis keep off big 5G spectrum game

•  With the Adanis submitting an earnest money deposit (EMD) of just Rs 100 crore on Monday for the upcoming 5G spectrum auction, the apprehension among the rivals that the group is nursing ambitions of being an all-India mobile player has been allayed at least for now.
• Based on its EMD, analysts say it can buy spectrum worth just Rs 900 crore, whose use will be limited to enterprises and captive networks -- that too is likely only in a few circles where it has its infrastructure like ports, airports, and power stations.
• The Department of Telecommunications on Monday announced four pre-bidders, which together deposited Rs 21,800 crore as EMD with Reliance Jio putting in Rs 14,000 crore, Bharti Rs 5,500 crore, and Vodafone Rs 2,200 crore, apart from the Adanis.
• As part of the auction, the DoT earmarks an EMD for each block of spectrum, which differs from circle to circle and spectrum band to band. Telcos, based on their plan for acquiring spectrum across segments, have to submit an EMD, which indicates how much the operators are willing to spend during the auction.
• The formula analysts use is that what telcos plan to spend on the auction is eight to 10 times the EMD.
• As part of the rule, telcos cannot bid more than this war chest and it is prudent to keep a cushion in the case of competition.
• For instance, analysts say Reliance Jio’s EMD is primarily meant to mask its real strategy. Experts say even in the previous auction Bharti and Reliance Jio had put in a higher EMD.
• However, it is clear Jio has taken an aggressive stance: It can either buy 100 MHz in the 3.5 GHz band or hit the cap of 130 MHz (40 per cent of the spectrum on offer), for which it has to pay Rs 49,000 crore at the base price, and go for anything between 800 and 1,000 MHz in the millimetre band (which will cost Rs 5,600-7,000 crore). In the millimetre band, it might keep one band (400 MHz) for B2C services and the other band for B2B services.