Info-tech

Telecom spectrum auctions from March 1

S Ronendra Singh New Delhi | Updated on January 06, 2021

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Operators to submit applications by Feb 5 for air waves worth ₹3.92-lakh crore

The government has announced that the next round of telecom spectrum auctions will be held in March. On Wednesday, the Department of Telecommunications (DoT) issued a notice, inviting interested operators to submit their applications by February 5.

The Cabinet on December 17, 2020, had approved the proposal for the auction of 2,251.25 MHz of spectrum worth ₹3.92-lakh crore at the base price.

Market analysts believe the spectrum auction will get bids in the  ₹30,000-50,000 crore range.

The DoT has fixed January 12 for the pre-bid conference and January 28 for seeking clarification to the notice. The final list of the bidders will be declared on February 24 and bids for spectrum  will start from March 1, it said.

The ‘Auction’

“A single auction process, referred to as the ‘Auction’ will be carried out for assigning spectrum blocks in various bands — 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz bands. However, it may be noted that the government reserves the right to use any other means to assign the spectrum, as it may deem fit, without assigning any reason whatsoever,” the notice said.

There will be a moratorium of two years for payment of the balance amount of one-time charges for the spectrum, which will be recovered in 16 equal annual instalments. In addition to the bid amount, successful bidders will also have to pay 3 per cent of the adjusted gross revenue (AGR), excluding wireline services, as spectrum usage charges (SUC) for the spectrum won through this auction, the notice said.

Bidders opting for 700 MHz band will have to shell out at least ₹32,905 crore on pan-India basis for the frequencies in the premium spectrum band.

How telcos will bid

A recent Credit Suisse report says most of the operators will be bidding for spectrum renewals based on TRAI's last reserve price. It expects renewals to cost  around ₹15,000 crore for Bharti Airtel and ₹11,500 crore for Reliance Jio.

The report says Airtel will restrict itself to renewing spectrum. “We expect Jio to purchase additional spectrum (beyond expiring spectrum) as it will look to augment its network capacity, having garnered 35 per cent subscriber market share and a much higher share of traffic,” it had said.

“We do not expect Vodafone Idea (Vi) to participate in the auction, where its 6.2MHz and 38.2 MHz spectrum in the 900/1800 MHz bands is expiring, given its cash flow constraints,” it added.

 

5G auctions

The government has not decided on the 5G auctions and, according to sources, it may conduct a separate auction for the same. It has kept the frequency bands of 3,300-3,600 MHz that industry identifies for rolling out 5G services out of the upcoming auction, though they were part of TRAI‘s recommendations for the auction.

In fact, Reliance Jio is the only operator that is asking the government to auction 5G spectrum too. Recently, Reliance Jio Chairman Mukesh Ambani had also indicated that “Jio will pioneer the 5G revolution in India in the second half of 2021.”

According to Cellular Operators Association of India (COAI), while the government has addressed the need for more spectrum, lowering the reserve prices would have provided additional resources for network expansion to the telcos.

“High reserve prices in past auctions have resulted in large amounts of spectrum remaining unsold. We hope the government will take additional measures to boost the financial health of the industry, which is the backbone of a digitally connected India," SP Kochhar, Director-General, COAI, said.

Published on January 06, 2021

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