For telcos, a damp spectrum auction, tariff hikes ring in a positive tone

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uneventful and saw limited bidding war. Only 1.3% of the total spectrum on offer was sold, a result of a cautious strategy adopted by telecom companies as their investment in the 5G spectrum is yet to reap good rewards. Limited additional investments in the recent auctions, along with the recent tariff hikes companies have taken is expected to improve their cash position.

Note that only 140 MHz of spectrum was sold this year as against the sale of over 50,000 MHz in the 2022 auction. As such, operators have built significant spectrum holding for 5G in the last auction ahead of the launch. But 5G utilization is still very low.

“The huge 5G investments done by Bharti Airtel Ltd and Reliance Jio face challenges with regard to monetization due to lack of use cases," Centrum Broking said in a report dated 30 June. Also read | The 5G spectrum auction call dropped for a reason The limited demand for spectrum meant most of it was sold close to the base price, saving telcos from additional financial liabilities. The 900 MHz band, where a significant amount of spectrum was put up for renewal, also saw limited out-bidding.

While the bidding was not expected to be aggressive, telcos had prepared themselves for this possibility by submitting a substantial amount of earnest money deposit, which determines the limit up to which telecom companies can bid. The total deposit submitted by telecom companies for this year's auction was ₹4,350 crore, which entitled them to bid up to ₹52,000 crore. Against this, the total final purchase was only ₹11,340 crore.