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Sticking to its earlier stated intention of conducting the 2G telecom spectrum auction in January, the department of telecommunications (DoT) has reduced the 60 days estimated for the process to 42.
The auction is to start on January 23, 2014, according to a Notice Inviting Applications (NIA) it issued late on Thursday night. It has decided to conduct auctions in the 1800 MHz and 900 MHz bands as a single process. Those interested must apply by January 4. The pre-bid conference will be on Friday and companies may seek clarifications on the rules by December 28.
Earlier, DoT had said it would require 60 days to start the auction from the date the Union Cabinet decided on the spectrum base price; the NIA was to be issued after 15 days of the decision. However, it has now issued the NIA within three days of Cabinet clearance.
The government aims to get Rs 48,000 crore from auction of the 1800 MHz and 900 MHz bands. It will auction 403 MHz spectrum in the 1800 MHz band and 46 MHz in the 900 MHz band. In 1800 MHz, the largest spectrum will be available for bidders in Tamil Nadu (30.2 MHz). The lucrative circles of Delhi and Mumbai will have 22.8 MHz and 25.2 MHz, respectively.
Early this week, the Cabinet approved a reserve (floor) price for 2G spectrum, 25.8 per cent lower than at the previous auction as suggested by the Empowered Group of Ministers (EGoM) on telecom, at Rs 1,764.79 crore for one MHz of pan-Indian spectrum in the 1800 MHz band.
The base price for this spectrum was about 37 per cent higher in the November 2012 auction, which got only muted response from telecom operators.
The auction would be for all 22 circles in the 1800 MHz band and in Delhi, Mumbai and Kolkata in the 900 MHz band. For the latter, it approved a rate 53 per cent lower than the previous auction price.
The reserve price for one MHz in the 900 MHz band will be Rs 360 crore in Delhi, Rs 328 crore in Mumbai and Rs 125 crore in Kolkata.
Licences are due for renewal in November next year in these three circles.
As in earlier auctions, successful bidders can pay the final price in instalments. In 1800 MHz, the successful bidder will have an option to pay 33 per cent upfront; in 900 MHz, upfront payment is 25 per cent of the final amount. There would be a moratorium of two years for payment of the balance amount of one-time charge for the spectrum, to be recovered in 10 equal annual instalments.
If all the spectrum gets sold at the reserve price and companies opt for deferred payment, the net income for the government in this financial year would be about Rs 15,000 crore.
New companies will have to bid for a minimum of 25 blocks of airwaves, each of 200 KHz frequency, amounting to 5 MHz in the 1800 MHz band. Existing companies will have to bid for a minimum of three blocks of airwaves in this band. Any company without any spectrum at present in a service area will be treated as a new entrant.
In the 900 MHz band, Bharti Airtel, Vodafone and Loop will be treated as new entrants, as their licences are to end next year. All bidders interested in buying in the 900 MHz band will have to buy a minimum of 5 MHz.
One operator will be permitted to have a maximum of 25 per cent of the spectrum assigned to all companies in a service area and up to 50 per cent of airwaves (allotted to all companies) in a particular band assigned in a service area.
