India’s Department of Telecom (DoT) on Wednesday said bidding for spectrum auction — for radiowaves worth Rs 3.92 lakh crore — will start from March 1.
India is not selling 5G spectrum during the forthcoming spectrum auction.
India, home to more than 1 billion mobile phone connections, is conducting the long-awaited spectrum auction after a gap of four years and over two years after the Telecom Regulatory Authority of India (TRAI) calculated and recommended base price for the radiowaves.
“While the Government has addressed the requirement for availability of more spectrum, lowering the reserve prices would have provided additional resources for network expansion to the telecoms. High reserve prices in past auctions have resulted in large amounts of spectrum remaining unsold,” said SP Kochhar, director general of COAI.
The DoT has fixed January 12 for the pre-bid conference and January 28 as the last date for seeking clarification to the notice.
Telecom operators will need to submit their application by February 5 for participation in the auction.
The final list of the bidders will be declared on February 24 and the auction process is scheduled to begin from March 1.
The Union Cabinet had approved the proposal to auction 2,251.25 Megahertz (MHz) of spectrum worth Rs 3.92 lakh crore on December 17, 2020, in seven frequency bands – 700 MHz, 800 MHz, 900 MHz, 2100 MHz, 2300 MHz and 2500 MHz – at the base price recommended by the TRAI.
India government has kept the frequency bands of 3,300-3,600 MHz band that can be used for 5G services out of the upcoming auction. These frequencies were part of TRAI recommendations for the auction.
Bidders opting for 700 MHz band will have to shell out at least Rs 32,905 crore on pan India basis for the frequencies in the premium spectrum band.
The signals transmitted in the 700 MHz band are considered to cover three times compared to 2100 MHz band — popularly known as 3G band.
The DoT has made available spectrum in all the 22 telecom circles across the country for 700 MHz band, 800 MHz band and 2300 MHz band, while radiowaves in 1800 MHz band are available in 21 circles, 900 MHz band and 2100 MHz bands in 19 circles each and 2500 MHz in 12 circles only.
Successful bidders opting for full upfront payment will need to do so within 10 days of declaration of the result.
In case of deferred payment option, successful bidders will need to make upfront payment of 50 percent in the case of 1800 MHz, 2100 MHz, 2300 MHz, and 2500 MHz bands, and 25 percent in case of 700 MHz, 800 MHz and 900 MHz bands of the final bid amount should be made within ten calendar days from the date DoT issues demand notice.
There will be a moratorium of two years for payment of the balance amount of one-time charges for the spectrum, which will be recovered in 16 equal annual installments.
In addition to the bid amount, successful bidders will also have to pay three per cent of the adjusted gross revenue (AGR), excluding wireline services, as spectrum usage charges for the spectrum won through this auction.
Market analysts believe the upcoming spectrum auction will get bids in the range of Rs 30,000-Rs 50,000 crore.
Telecom operators are likely to focus on the renewal of spectrum. Vodafone Idea may not participate in the auction for renewal of their spectrum in some circles.
Rating agency Icra said it does not foresee any major participation in the 700 MHz band and pegged the bids to be in the range of Rs 55,000-60,000 crore.
JM Financials, on the other hand, expects bids to be in the range of Rs 30,000 crore only.
Bharti Airtel’s 12.4 MHz of spectrum in the 900 MHz band and 47 MHz in 1800 MHz band and Reliance Communications’ 44 MHz of spectrum in the 800 MHz band being used by Reliance Jio are coming up for the renewal.
Vodafone Idea needs to renew 6.2 MHz of spectrum in the 900 MHz band and 38.2 MHz in the 1800 MHz band.
According to Credit Suisse, renewal of these spectrum frequencies will cost around Rs 15,000 crore to Bharti Airtel and Rs 11,500 crore to Reliance Jio.
