The Cabinet is likely to take a final decision this week on the pricing and timing of the next round of spectrum auctions. According to top Government sources, the Cabinet may decide to hold the auction in August, instead of in mid-July as suggested by Department of Telecom (DoT) Secretary JS Deepak.
However, pricing of various frequency bands and the related spectrum usage charge may be cleared as per the recommendations of the Telecom Commission.
“Issues such as freeing up Defence spectrum, spectrum usage charges (SUC) and pricing of bands have been cleared. The Cabinet is likely to discuss and take some final decisions in its upcoming meeting (scheduled for Wednesday),” a senior official told BusinessLine .Biggest ever
This will be the biggest telecom auction ever, with most major bands up for bidding and revenue of ₹5.36 lakh crore expected. The major bands include 700MHz and 2500MHz, which will be auctioned for the first time. Other bands include 900MHz, 1800MHz, 2100MHz and 2300MHz.
Apart from agreeing to the Telecom Regulatory Authority of India (TRAI) reserve price for the spectrum bands, the Telecom Commission (TC), in its latest meeting, had also proposed a lower, 3 per cent spectrum usage charge (SUC), from the operators’ adjusted gross revenue for all bands. This proposal has also gone to the Cabinet for a final call.
Per the TC decision, the SUC will be calculated using a weighted average formula based on the total spectrum holding. However, the proposal will be limited only to the upcoming auction.Defence spectrum
Secondly, the Defence Ministry had also agreed to hand over spectrum in the 2100 (3G) and 1800 MHz bands as was requested by the DoT, which will help telecom companies gain more spectrum. At base price, the value of spectrum has been kept at ₹30,000 crore.
As a result of this swap agreement between the DoT and Defence, 15 MHz of 3G spectrum in each of the 22 telecom circles and 201 MHz of spectrum in the 1800 MHz band will become available for mobile services.
Sources from the government said the Finance Ministry wants the auctions to be a big success. The government expects to earn total revenue of ₹99,000 crore from the telecom sector this fiscal year and part of it could come from this auction.
Telecom Minister Ravi Shankar Prasad had told this newspaper recently that pricing for the 700MHz band has been arrived at by the prescribed procedure. Players such as Vodafone and Airtel have threatened to skip the 700MHz band auction, saying they “cannot afford” to participate at such a price.
TRAI had recommended a reserve price of ₹11,485 crore per unit for the 700MHz band, which the DoT has also agreed to for the upcoming auctions.