The Cabinet, on Wednesday, approved the telecom spectrum auction to be held in March. The notice inviting applications will be issued within this month.

The auction will be for spectrum in 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz frequency bands and a total of 2251.25 MHz is being offered with total valuation of ₹3,92,332.70 crore (at reserve price). Spectrum will be offered for assignment for validity period of 20 years, the government said in a statement.

The last auction was held in October 2016 and bids worth around ₹65,789 crore were received at the end of 31 rounds for 965MHz of spectrum out of total 2354.55MHz put for auction. There was no bidder for the 700 MHz then and Telecom Regulatory Authority of India had to lower the prices of most of the bands.

“By winning right to use spectrum through the auction, incumbent telecom service providers will be able to augment their network capacity whereas new players will be able to start their services. The conditions of the auction will be same as in 2016 auctions...there are no changes,” Ravi Shankar Prasad, Minister of Telecommunications and IT, said.

Payment for bids

Successful bidders may pay entire bid amount in one go (upfront) or may exercise an option to pay a certain amount (25 per cent for spectrum won in 700 MHz, 800 MHz, 900 MHz bands or 50 per cent for spectrum won in 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz bands) upfront and remaining amount in a maximum up to 16 equated annual instalments, after a moratorium of two years.

As per the Telecom Regulatory Authority of India (TRAI) recommendations, the spectrum available are 770 MHz in 700 MHz band, 58.75 MHz in 800 MHz band, 9.4 MHz in 900 MHz band, 46.8 MHz in 1800 MHz band, 275 MHz in 2100 MHz band and 230 MHz (unpaired) in 2500 MHz band).

“In addition to the bid amount, successful bidders will also have to pay 3 per cent of the Adjusted Gross Revenue (AGR) excluding wireline services as spectrum usage charges for the spectrum won through this auction,” said government said. However, the government has decided not to auction frequencies in 3,300-3,600 Mhz bands that were identified for 5G services.

In the auction, bidders will have to comply with parameters/conditions like block size in which bidders will be able to submit their bids, spectrum cap — the maximum amount of spectrum that can be held by each bidder after the completion of the auction, roll-out obligations, payment terms, etc.

According to a ICICI Securities report, spectrum auction is limited to renewal and unsold 4G spectrum. While, Bharti Airtel (Airtel) and Vodafone Idea India (VIL) have very limited spectrum coming up for renewal, Reliance Jio (RJio) has 850MHz (originally owned by Reliance Communications).

”Airtel has ₹129 billion (₹12,900 crore) of spectrum coming for renewal at TRAI’s recommended spectrum reserve prices if it renews entire spectrum. However, the company has already bought spectrum from Tata Tele, Telenor and Videocon in these circles, and thus does not need to renew its entire spectrum,” it said.

Airtel is likely to buy spectrum worth only ₹5,800 crore in the upcoming auctions. VIL has ₹10,000 crore worth of spectrum coming up for renewal, it said adding that Vodafone and Idea merger has added significant spectrum in VIL, and it may require to buy spectrum worth only ₹1,900 crore in the upcoming auctions, ICICI Securities said.

“While the government has addressed the requirement for more spectrum, lower reserve prices would have provided additional resources for network expansion to the telcos. High reserve prices in past auctions have resulted in large amounts of spectrum remaining unsold. We hope the government will take additional measures to boost the financial health of the industry, which is the backbone of a digitally connected India,” SP Kochhar, Director General, Cellular Operators Association of India (COAI), said.

 

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