Telecom spectrum auction to start from September 29

Rupee India telecomlead
Telecom Secretary JS Deepak announced on Monday that India’s next round of spectrum auction will start on September 29.

The India government hopes that it will be the largest ever spectrum auction — going by the overall base price of $84 billion and the quantum of airwaves on offer.

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The India government is trying to sell airwaves at a time when some of the telecom network operators are not keen to make huge investment for buying spectrum. In fact, some of the research reports on telecom industry indicated India will mobilize around $12 billion to $15 billion against the target of $84 billion.

The Department of Telecommunications (DoT) released the Notice Inviting Application (NIA) for the spectrum auction on Monday. “The spectrum auction will start on September 29 and the total amount of spectrum that will be offered is 2,354.55 MHz,” Deepak said.

“This include the airwaves recommended by Telecom Regulatory Authority of India (TRAI) as well as the spectrum that became available through harmonisation process,” the Secretary told reporters in a press meet.

The 2,300-plus MHz of airwaves on the block for telecom operators is in seven bands — 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz and 2,500 MHz — as against 470.75 MHz in the previous round, which is set to fetch the exchequer $17 billion during its tenure.

The Secretary said government has harmonised 197 MHz of spectrum in 1,800 MHz band and 37.5 MHz in the 800 MHz band. “The government is offering additional 234.5 MHz airwaves for auction in these two bands at a reserved price of Rs 27,000 crore.”

Overall, based on the reserve price, the mop up is expected to be Rs 5.66 lakh crore.

Deepak said telecom operators will have the choice of both upfront and installments options. The service providers who win airwaves below 1 GHz bandwidth will have to pay 25 per cent upfront, and those winning above that the upfront payment will be 50 percent.

“One new bidding-friendly measure the government has adopted this year is: Spectrum won will be assigned within 30 days from the date of upfront payment. Interest on deferred payment, linked to base rate, will be 9.3 percent this year against 10 percent in 2015.

In a meeting of the cabinet in June, chaired by Prime Minister Narendra Modi, an official nod was given for the reserve price and the auction norms. This was followed by a similar nod last week for spectrum usage charge at 3 percent of a telecom company’s adjusted revenues.

A highlight of the auction will be the auction of the 700 MHz band for the first time — touted as the most efficient airwave range for data services — but also with doubts over adequate takers due to the high base fixed by the government.

The telecom industry watchdog TRAI, had suggested Rs 1,595 crore per MHz base for this band, which translates into a reserve price of Rs 11,485 per MHz for a pan-India footprint.