Reliance Jio submits Rs 6,500 crore as earnest money for spectrum auction


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Reliance Jio Infocomm is set to bid aggressively for spectrum in the forthcoming auction, upending expectations of rivals and raising the prospect of having to pay more than they had expected. Jio has filed the highest earnest money deposit (EMD) — around Rs 6,500 crore, almost the same as the combined deposits made by the top three telcos, an indication of the Mukesh Ambani-owned newcomer's aggressive intent in the spectrum sale slated to start October 1.
Bharti Airtel, Vodafone India and Idea Cellular made deposits of around Rs 1,980 crore, Rs 2,745 crore and Rs 2,050 crore, respectively, people familiar with the auction process said. They added that Tata Teleservices made a deposit of over Rs 1,000 crore, while Reliance Communications and Aircel put in around Rs 313 crore and Rs 120 crore, respectively.
"Going by (rough) calculations of EMDs, the government could sell airwaves worth Rs 1.5 lakh crore just at the reserve price, which could translate into upfront payment of at least Rs 55,000 crore," a senior official told ET.
Analysts differed, saying the government is likely to raise around Rs 80,000 crore from its largest sale of airwaves.The finance ministry has budgeted revenue of Rs 98,995 crore from telecom, which includes less than Rs 55,000 crore from the spectrum auction this fiscal year. The rest is expected to come from various levies, services and dues from the auctions last year.

Jio's auction pitch took the industry by surprise as it had been assumed the company would not bid aggressively and only look to fill coverage gaps. This was based on Jio having acquired sufficient capacity in recent auctions and a sharing and trading pact with RCom. "We are surprised to see Jio's deposit. It's way above our estimates but shows its intent," said a top executive.
Telecom veteran BK Syngal of Dua Consulting said Jio could well buy some spectrum in the 700 Mhz band given the deposit. An analyst at a foreign brokerage said even no. 1telco Bharti Airtel could pick up 700 Mhz spectrum in certain circles — Uttar Pradesh East and West and Bihar —where prices are relatively low. Participants are allotted points on the basis of the EMD.
The deposit reflects the war chest an operator has to buy airwaves. EMD is typically pegged at about 10% of the reserve price of airwaves in each circle. Jio's EMD shows that at the current base price, the company could theoretically buy spectrum worth Rs 65,000 crore.