BackCabinet approves next round of spectrum auction, to be held in March
Four years ago, the government raised just ₹65,789 crore through spectrum auction, a fraction of the ₹5.63 trillion worth of airwaves put up for sale. Spectrum in the 700MHz and 900 MHz remained unsold in 2016
PremiumNEW DELHI:The Union cabinet on Wednesday approved the modalities of the next round of spectrum auction to be held in March, communications, electronics and information technology (IT) minister Ravi Shankar Prasad said. The notice inviting applications for sale of airwaves will be issued this month.
The department of telecommunications (DoT) plans to sell 2,251 megahertz (MHz) of spectrum worth ₹3.92 trillion. It will auction spectrum in the 700MHz, 800MHz, 900MHz, 1800MHz, 2100MHz, 2300MHz and 2500MHz bands, some of which are touted as the most efficient for 4G services. Spectrum in the 3300-3600MHz bands, recommended by the telecom regulator for 5G, have not been included in the upcoming auction.
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Bidders will have to comply with auction conditions such as block size, spectrum cap which specifies the maximum limit for holding airwaves by each bidder, rollout obligations, and payment terms, according to a government statement.
Buyers can either pay the entire bid amount upfront or may shell out 25% for spectrum in the 700MHz, 800MHz and 900MHz bands, and 50% for airwaves bought in the 1800MHz, 2100MHz, 2300MHz and 2500MHz bands initially. The remaining amount can be paid in a maximum of up to 16 annual installments, after a moratorium of two years.
“In addition to the bid amount, successful bidders will also have to pay 3% of the adjusted gross revenue (AGR), excluding wireline services as spectrum usage charges (SUC) for the spectrum won through this auction," the statement said.
Analysts fear the next round of spectrum auction could be a repeat of the 2016 fiasco when large chunks of airwaves remained unsold due to high reserve prices. Four years ago, the government raised just ₹65,789 crore through spectrum auction, a fraction of the ₹5.63 trillion worth of airwaves put up for sale.
Spectrum in the 700MHz and 900 MHz had remained unsold in 2016.
The upcoming spectrum auction is crucial for Reliance Jio Infocomm Ltd, among the three largest private players in India, as a large chunk of its airwaves in the 800MHz band will expire in July-August. Reliance Jio provides only 4G services.
Spectrum in the 800MHz band is touted as the most efficient and is used for 4G services.
In a letter written to the DoT in September, Jio had urged the Centre to conduct spectrum auction at the earliest, hinting that Bharti Airtel and Vodafone Idea are not interested as they sit on large amounts of airwaves amassed through mergers and acquisitions over the years. Jio had told DoT it required additional spectrum to improve the quality of its 4G services.
It also said the delay in spectrum auction will hurt investor confidence and lead to huge losses in government revenues.
The Reliance Industries' telecom subsidiary has been using bankrupt Reliance Communications Ltd’s spectrum in the 800 MHz band under a trading and sharing agreement to expand its 4G coverage across 21 circles in the country. Of the 21, the licence for 18 circles will expire in July-August 2021.
Airtel and Vodafone Idea will also have their airwaves expiring around the same time, and will need to repurchase spectrum, but mostly in the less-expensive 1800 MHz band.
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