Govt hopes to earn Rs 64,000 cr from spectrum auction

Cabinet to decide on auction modalities today; 2,100-MHz may not be sold simultaneously with other bands

The government expects the total proceeds from sale of 800-MHz, 900-MHz and 1,800-MHz spectrum through an auction in February to be Rs 64,000 crore — much higher than the target of Rs 43,065 crore set in the Union Budget for 2014-15 — a draft Cabinet note is learnt to have said.

The Union Cabinet is expected to approve the reserve price for these three bands, besides a few other decisions of the department of telecommunications (DoT), at a meeting on Monday. The Telecom Commission (TC) had proposed the base price for each MHz of 800-MHz spectrum at Rs 3,646 crore, of 900-MHz at Rs 3,695 crore and of 1,800-MHz at Rs 2,191 crore. 

Unlike earlier expectations, 2,100-MHz spectrum, used for 3G telephony, might not be auctioned simultaneously with the other bands, as TC is yet to take a call on the reserve price for 2,100-MHz. It might take a decision later this week and seek the Cabinet’s approval after that.

The Budget had projected the total revenue from the telecom sector this financial year to be Rs 45,471 crore, 16.7 per cent higher than the interim budget estimates. Of this, Rs 14,355 crore was estimated to come to the exchequer from the sale of spectrum. Since companies pay in a deferred way, only a third of the total estimated bid amount is generally seen coming in a financial year. So, the total estimated bid amount would have been Rs 43,065.

The auction of airwaves in the 800-MHz, 900-MHz and 1,800-MHz bands is likely to take place by February 23 and the notice for inviting applications could be issued this week.

Last week, the Telecom Regulatory Authority of India (Trai) had proposed a reserve price of Rs 2,720 crore for each MHz of 2,100-MHz spectrum. This is to be first considered by DoT, and TC could then decide and subsequently send it to the Cabinet for approval.

The telecom industry has long been asking for additional spectrum for commercial use and urging the government to auction radiowaves in the 2,100-MHz band. The main contention was on the plan that the defence ministry should give 15 MHz of 2,100-MHz spectrum in return for an equal amount of 1,900-MHz spectrum that DoT had kept aside for CDMA operators’ expansion.

A mock auction for prospective bidders has been scheduled for February 19 and 20. The government has appointed Mjunction Services the auctioneer. There have been certain changes to the dates of various events in the run-up to the auction but it has been ensured the date of the actual auction does not change, the draft Cabinet note is believed to have said.