Trai paper seeks to sweeten spectrum auction bidding
New Delhi: India’s telecom regulator on Monday started discussions to address issues that prevented telecom operators from bidding aggressively in last year’s spectrum auction and blew a hole in government revenues.
The Telecom Regulatory Authority of India (Trai), in a consultation paper on the auction, sought feedback on whether it was desirable to auction all available spectrum or opt for a phased auction, based on the requirements of the industry. It also sought the opinion of operators on the timing of the auction.
The discussions are being held at a time when older operators such as Bharti Airtel Ltd, Vodafone India Ltd and Idea Cellular Ltd are facing intense pressure from new entrant Reliance Jio Infocomm Ltd. High debt and deteriorating finances of telcos amid a bruising tariff war are likely to stymie demand for more spectrum, a situation that doesn’t bode well for the government.
The department of telecommunications wants to hold the next auction in 2017 itself, while the operators’ lobby group wants it to be pushed to the end of next year at the earliest. Towards this, the regulator is seeking telecom operators’ views on block sizes and minimum quantity for bidding on 700 megahertz (MHz), 800MHz, 900MHz, 1,800MHz, 2,100MHz, 2,300MHz and 2,500MHz bands.
In the 3,300-3,400MHz and 3,400-3,600MHz bands, which are proposed to be auctioned for the first time, Trai wants to know if optimal block sizes and minimum quantity for bidding are required.
Trai also wants to discuss if there is a need to review the rollout obligations, which is one year from the effective date of licence or the date of assignment of spectrum won in the auction process, whichever is later. Trai also wants to review the current spectrum cap, which bars a company from holding more than 50% spectrum in a particular licence area and 25% spectrum in aggregate.
Trai is consulting operators after a tepid response to the 2016 auction, when only 965MHz out of a total of 2,354.55MHz spectrum was sold for Rs65,789.12 crore. The money raised was a fraction of the Rs5.63 trillion (at base price) of spectrum for sale.
Trai, in the consultation paper, has acknowledged the industry’s poor financial health, massive debt of Rs4 trillion and its commitment to pay Rs3 trillion in deferred payments to the government for the purchase of spectrum rights in recent auctions.
“In view of the above, the issue for the consultation arises as to when the next round of access spectrum should be held,” Trai said.
Rajan Mathews, director general of lobby group Cellular Operators Association of India, said the industry wants the auction to be held towards the end of 2018 or early 2019.
“As by then M&A (merger and acquisition) activities will end and some of the companies will also have to give back some spectrum. A clear picture will emerge by then,” he said.
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