India telecoms may face another spectrum auction early next year

Telecom and IT minister Ravi Shankar Prasad
India’s Finance Ministry headed by Arun Jaitley is mounting pressure on the Telecom Ministry run by Ravi Shankar Prasad to conduct the next round of spectrum auctions before March 2016 to meet its budgetary requirements, Hindu Business Line reported.

Funds from the spectrum auction will be important to meet the fiscal deficit target of 3.9 percent of GDP in 2015-16. The report said there will be a shortfall in disinvestment proceeds from the targeted Rs 69,500 crore.

This means, the NDA Government ruled by the BJP will conduct the next round of spectrum auctions in February-March 2016 for selling frequencies in the 2G, 3G, and 4G LTE bands. Spectrum in the 700 MHz band for 4G is likely to be on offer in the upcoming auctions. Financial viability of Indian telecoms will be a question mark.

The ongoing call drop issue and the compensation guidelines by TRAI have significantly impacted the investment mood of telecoms such as Bharti Airtel, Idea Cellular, Vodafone, etc. As usual, the Mukesh Ambani-promoted Reliance Jio Infocomm, which will be launching 4G in the second quarter of 2016, will be a main force in the Indian spectrum auction market.

Budget 2015-16 has targeted raising Rs 42,865.62 crore as non-tax revenue from one-time spectrum charges and auction of 2G airwaves in the 1800 MHz, 900 MHz and 800 MHz bands. Since telecoms are paying spectrum fee in instalments, the India government needs very good response from the domestic telecoms before going ahead with the auction.

During the last auction in March, the NDA government mobilized Rs 1.10 lakh crore by selling 5 MHz each in the 17 circles totaling 85 MHz. It is not known whether the recent guidelines on spectrum sharing and spectrum trading will have some negative impact on the future of spectrum auctions in India.

Baburajan K
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