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DoT to start spectrum auctions from 1 March

  • Telecom companies can apply till 5 February and auction will kickstart on 1 March, according to the auction notification
  • In the past 10 years, the government has auctioned spectrum six times – in calendar years 2010, 2012, 2013, 2014, 2015 and 2016

TheDepartment of Telecom on Wednesday announced that the spectrum auction schedule. According to the auction notifications, telecom companies can apply till 5 February and auction will kickstart on 1 March, 2021.

The final list of the bidders will be declared on February 24 and bids for spectrum in frequency bands of 700 MHz, 800Mhz, 900 Mhz, 2100 Mhz, 2300 Mhz and 2500 MHz is scheduled to start from March 1, according to the notice.

The Indian government planned to auction 3.92 trillion worth of airwaves suitable for fourth-generation (4G) mobile networks in March after a gap of more than four years, as the government seeks to raise resources to fund infrastructure spending and carry out a nationwide vaccination programme.

The Union Cabinet approved a proposal for the auction of 2,251.25 Megahertz (MHz) of spectrum worth 3.92 lakh crore at the base price on December 17, 2020.

The DoT was expected to issue the Notice Inviting Application (NIA) for the auction in December but due to an emergency engagement of a top authority it got delayed.

The Digital Communications Commission, the apex decision making body of the DoT, in May last year approved the spectrum auction plan worth 5.22 lakh crore which included radiowaves for 5G services as well. A part of the 300 MHz of spectrum identified by the DoT for 5G services is being used by the Navy, and the Department of Space has also made claims on a significant portion of these radio waves.

The industry has also been demanding the government to lower the base price of 5G spectrum as each operator will need to shell out around 50,000 crore for the required quantum of radio waves for the next generation services.

In addition to the bid amount, successful bidders will also have to pay three per cent of the Adjusted Gross Revenue (AGR), excluding wireline services, as spectrum usage charges for the spectrum won through this auction.

Successful bidders may pay entire bid amount in one go (upfront). They can also 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 the remaining amount in a maximum of up to 16 equated annual instalments after a moratorium of two years.

The upcoming spectrum auction to be held in March may not see aggressive response from the industry and bids may be in the range of 30,000 crore to 50,000 crore for the radiowaves valued at around 3.92 lakh crore, according to analysts.

Market experts believe that telecom operators are likely to focus on renewal of spectrum and Vodafone Idea may not participate in the auction for renewal of their spectrum in some circles.

According to Icra, it does not foresee any major participation in the 700 MHz band and pegged the bids to be in the range of 55,000-60,000 crore.

JM Financials, on the other hand, expects bids to be in the range of 30,000 crore only.

Bharti Airtel has 12.4 MHz of spectrum in 900 MHz band and 47 MHz in 1800 MHz band, and Reliance Communications' 44 MHz of spectrum in 800 MHz band, being used by Reliance Jio, is coming up for renewal.

Vodafone Idea needs to renew 6.2 MHz of spectrum in 900 MHz band and 38.2 MHz in 1800 MHz band.

According to Credit Suisse, renewal of these spectrum frequencies will cost around 15,000 crore to Bharti Airtel and 11,500 crore to Reliance Jio.

In the past 10 years, the government has auctioned spectrum six times – in calendar years 2010, 2012, 2013, 2014, 2015 and 2016.

With inputs from agencies

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