Expecting to garner a huge revenues from mega sale of 2G, 3G and 4G mobile airwaves worth over Rs 5.63 lakh-crore from telecom industry, the Government on Monday announced that the bidding rounds for the country’s biggest-ever spectrum auction would kick-off from September 29. “large chunk of spectrum is being put for auction which address issue of fragmentation, improve quality of service and rules have been made bidder friendly,” Telecom Secretary JS Deepak said while releasing Notice Inviting Application (NIA).
The Government is expecting to raise at least Rs 64,000 crore from the auction of about 2,354.55 Mhz of spectrum and Rs 98,995 crore from various levies and services in the telecom sector this financial year. For the first time, the Government has promised to assign spectrum within 30 days of making upfront payment by successful bidders.
The Government will put a total of 2,354.55 megahertz (Mhz) of mobile airwaves frequencies for auction all band -- 700 Mhz, 800 Mhz, 900 Mhz, 1800 Mhz, 2100 Mhz and 2300 Mhz. All the airwaves being put for auction can be used for high speed 4G services. The total quantum of spectrum being put for auction includes about 197 Mhz of frequencies in 1800 Mhz band and 37.5 Mhz in 800 Mhz band (CDMA band).
This is the first time that airwaves in 700 Mhz band will be put up for auction. The airwaves in this band are considered premium among all, as cost of providing service in it is one-third cost of 3G service in 2100 Mhz band. The 700 Mhz band alone has potential to fetch bids worth Rs 4 lakh crore if all spectrum in it gets sold at the base price.
The Department of Telecom (DoT) will hold pre-bid conference on clarification over NIA on August 13. The DoT will issue clarification, if any, on August 29, and then will give 15-days time to companies for submitting their application. Interested bidders will have to submit application for participating in auction by September 13. Thereafter, successful bidders will have to pay 3 per cent of their revenues from telecom services as spectrum usage charges (SUC) to the Government.
However, telecom companies winning spectrum in 700, 800 and 900 Mhz band will have to pay at least 25 per cent of the bid amount initially within 10 days the auction ends. Rest of the payment will have to be paid in 10 annual instalments after two years of moratorium.
For rest of the bands, at least 50 per cent of payment will have to be made and the Government has also reduced interest on instalments to 9.3 per cent from about 10 per cent earlier. “With auction size of this magnitude and bidder friendly rule there is going to be immense interest from bidders. The amount of spectrum being put to auction is more than any previous auction. It will give them opportunity to bid and acquire chunk of spectrum which would enable to them to provide international quality services,” Deepak said.
Existing or incumbent telecom operators winning spectrum in the upcoming auction will need to pay SUC according to weighted average method calculated taking in account current levy applicable on them and three per cent on fresh airwaves.
The Government has relaxed equity lock-in period. This will free company, whose networth has been used to procure spectrum, to exit from the company in 1 year as against 5 years prescribed earlier. “The roll out obligation will be considered complete if the district headquarters and block headquarters are covered by use of any technology in any band. In the sense that if a district-headquarter is covered through one technology it does not have to be done by other technology,” Deepak said.
New participants in the auction will have to provide Performance Bank Guarantee (PBG) of Rs 35 crore per telecom circle for bidding in 700 MHz, 800 MHz, 900 MHz and 1800 MHz. Existing players will need to provide PBG of Rs 21 crore per circle.