Spectrum auction: main facts to remember

Spectrum auction India
India government today announced datelines and action plans for conducting the much awaited spectrum auction.

The following are the main dates to remember.

8 August — Issue of Notice Inviting Applications (NIA)
13 August — Pre-bid Conference
19 August — Last date for seeking clarifications on NIA
29 August — Clarifications to NIA
13 September — Last date for submission of Applications
14 September — Publication of Ownership details of Applicants
16 September — Bidder Ownership Compliance Certificate
19 September — Pre-qualification of Bidders
22 September — Last date of withdrawal of applications
23 September — Final List of bidders
26 and 27 — September Sept Mock Auction
29 September — Start of the Auction
Payment of the Successful Bid Amount Within 10 calendar days

As usual, India will give the right to use certain spectrum for 20 years through spectrum auction.

The government will conduct a single auction in Simultaneous Multiple-Round Ascending (SMRA) format for 7 bands.

The government will try to sell spectrum in the 700MHz, 800MHz, 900MHz, 1800MHz, 2100MHz, 2300MHz and 2500MHz bands together.

India is aiming to mobilize $84 billion through the spectrum auction. The amount is based on the base price. This will be the largest ever spectrum auction in India.

India is trying to sell 2354.55 MHz spectrum. This includes 197 MHz of additional spectrum in 1800 MHz band and 37.5 MHz in 800 MHz band released due to harmonization of spectrum in these bands.

SUC on spectrum acquired in the forthcoming auction in 700, 800, 900, 1800, 2100, 2300 & 2500 MHz band will be 3 percent of AGR.

India will apply the weighted average of SUC rates across all spectrum assigned to operators — whether assigned administratively or through auction or through trading — in all spectrum bands including BWA spectrum obtained in 2010 auction for charging SUC subject to a minimum of 3 percent of AGR. The weighted average is to be derived by sum of product of spectrum holdings and applicable SUC rate divided by total spectrum holding. The Weighted Average Rate should be determined operator wise for each service area.

The amount of SUC payable by the operators during 2015-16 at weighted average derived after taking into consideration the spectrum acquired in the coming auction and excluding the spectrum in 2300 MHz/2500 MHz band acquired / allocated prior to 2015-16, be treated as the floor amount of the SUC to be paid by the operators. In case there is a reduction in AGR of the service provider, the floor amount of SUC shall be reduced proportionately.

Telecom network operators have the option of making payment either full upfront or through deferred payment option.

India has changed the quantum of deferred payment in case of over 1GHz band — 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz — to 50 percent of the bid amount from 33 percent.

If telecoms are buying below 1 GHz band — 700 MHz, 800 MHz and 900 MHz — the quantum of deferred payment will be 25 percent of bid amount.

India government is promising that telecoms will receive the spectrum within 30 days from the date of receipt of due payment under both options.

India government has reduced the lock-in period of equity in the company to one year instead of earlier stipulation of minimum period of 3 years or completion of roll out obligation, whichever is later.

In case of deferred payment option the same methodology of making part payment as upfront and balance payment in 10 yearly installments after 2 year of moratorium is retained.

The government has slashed the interest rate for the deferred payment option to 9.3 percent from 10 percent.

The government has modified the method of calculation of spectrum cap. The spectrum surrendered has also been included in the calculation of spectrum cap apart from the spectrum put to auction and assigned spectrum. The spectrum cap shall not be reduced in case spectrum is allocated for non-commercial use after auction.

The government has changed roll out obligations:

# Submission of self-certification of completion of roll-out obligation to the tune of 90 percent.

# The roll-out obligation has been further eased out. Now the roll-out obligation shall be treated as fulfilled once the required numbers of district headquarters or block headquarters are covered by use of any technology in any band.

The India government said frequency allocation process has been streamlined to facilitate bidder to have maximum quantity of contiguous spectrum provided it does not disturb the block of 5 MHZ for other bidders.

Baburajan K
[email protected]

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