Telecom major Bharti Airtel has approached the Department of Telecom to reduce the bank guarantees it had submitted for the upcoming spectrum auction, indicating a toning down of its bids for the airwaves.
Airtel, which submitted the highest amount in bank guarantees, sought the reduction today, the last day for withdrawing applications to participate in the auction. "We are approaching DoT to check if we could replace bank guarantees...Making our total EMD (earnest money deposit) as Rs 2,975.25 crore instead of Rs 3,700.25 crore submitted with the application," Airtel Director for legal and Regulatory Affairs Jyoti Pawar said in a letter to Telecom Secretary MF Farooqui.
The minimum earnest money required to be deposited depends on the spectrum category and service areas for which companies want to bid. As per rules, companies were asked to submit earnest money deposits in the form of bank guarantees to get points needed to bid in the spectrum auction. Vodafone submitted Rs 2,800 crore in bank guarantees, Reliance Jio Infocomm Rs 2,596.25 crore, Idea Cellular Rs 1,567.5 crore, Telewings (Uninor) Rs 330 crore, Tata Teleservices Rs 267 crore, Reliance Communications Rs 198.75 crore and Aircel Rs 100 crore.
The Empowered Group of Ministers on telecom, headed by Finance Minister P Chidambaram, decided yesterday to levy annual spectrum usage charge (SUC) on new airwaves for mobile services at 5 per cent of their adjusted gross revenue earned from telecom services. The present rate is in the range of 3-8 per cent. A recommendation by the Telecom Regulatory Authority of India for a uniform SUC of 3-5 per cent across all players had been backed by GSM operators such as Airtel, Vodafone and Idea Cellular.
Airtel's licences in Delhi and Kolkata, where it holds the premium 900 MHz spectrum, are expiring in November. It is crucial for companies to emerge as the highest bidder in these two service areas to retain the airwaves. Even after lowering of EMD, Airtel would have the highest points, enabling it to bid for the maximum quantity of spectrum in the auction starting on February 3.
Vodafone has opted out from bidding in seven of the 22 circles in the country, while RCom will not take part in eight circles. The other companies, except Tata Teleservices, have been declared eligible to bid in all circles. Tata Teleservices was found ineligible to bid for Delhi services by DoT for an undisclosed reason. A new player needs to submit a minimum bank guarantee of Rs 1,918.75 crore if it plans to bid for pan-India spectrum in the 1800 MHz band.
For the scarce 900 MHz band, companies are required to deposit Rs 438.75 crore as minimum earnest money if they want to bid in all three metros - Delhi, Mumbai and Kolkata. For the 900 MHz band in Delhi and Mumbai, the two major metros, companies are required to provide a bank guarantee of Rs 172.5 crore each.