Feb spectrum auction to fetch govt Rs 1 lakh cr

15 MHz of 2,100-MHz spectrum to go under the hammer in December

Based on its calculations of the premium over the base price, the Department of Telecommuni-cations (DoT) reckons the government will raise up to Rs 1,00,000 crore through the auction of telecom spectrum in the 800-, 900-, 1,800- and 2,100-MHz bands in February. Earlier, it had been estimated the government’s revenue from the sale would be about Rs 80,000 crore.

The DoT has decided to hold another round of auction to sell 15 MHz in the 2,100-MHz band in December 2015 or January 2016. The additional spectrum will be available to the DoT through a swap with the defence ministry for airwaves in the 1,900-MHz band.

“Only five MHz is available in the 2,100-MHz band. Another 15 MHz, to be swapped with the defence services, will only be available after some time, as the telecom and defence spectrum are intermingled. There are some issues; talks are on the fast track and we will put up this spectrum for sale in December or January next year,” said a senior DoT official.

Since telecom companies must pay 25 per cent upfront for all bands except the 1,800-MHz one (for which they must pay 33 per cent), the government can expect to garner about Rs 25,000 crore immediately through the February auction.

The move to auction another 15 MHz of 2,100-MHz spectrum is expected to assure telecom companies they will have another chance to buy spectrum within a few months if they don’t get as much as they need in February. A total of 25 of the 29 licences in the 900- and 1,800-MHz bands are set to expire in December, and the other four in 2016. If these operators are unable to buy the spectrum they have to return, they can try their luck in December-January.

 

Also Bharti, Vodafone, Idea, Reliance and Aircel, none of which has nationwide spectrum for 3G services, can bid again in December-January. With five MHz in the 2,100-MHz band to be sold in February and another 15 MHz later, 3G operators can provide services nationwide.

In February, 103.75 MHz of airwaves will be auctioned in all service areas in the 800-MHz band, 177.8 MHz in 17 service areas in the 900-MHz band, 99.2 MHz in 15 areas in the 1,800 MHz band, and five MHz in the 2,100-MHz band.

On Monday, the Cabinet had approved the auctions and set the reserve prices for the 800-, 900- and 1,800-MHz bands. It had also decided to sell spectrum in the contentious 2,100-MHz band simultaneously.

The pan-India reserve price is Rs 3,646 crore per MHz in the 800-MHz band; Rs 3,980 crore in the 900-MHz band (excluding Delhi, Mumbai, Kolkata and Jammu & Kashmir); and Rs 2,191 crore in the 1,800-MHz band (excluding Maharashtra and West Bengal).

The prices set by the Cabinet are based on recommendations by the Telecom Commission and are higher than what the Telecom Regulatory Authority of India (Trai) had suggested.

The auction is likely to start on February 23 and the notice for inviting applications could be issued this week. The government has appointed Mjunction Services as the auctioneer.

On Wednesday, the Telecom Commission sent back the Trai’s suggestions on pricing of the 2,100-MHz band, after deliberating on the views of an internal committee of the DoT. It said the regulator’s prices were low.

While the Trai had recommended a base price of Rs 2,720 crore for each MHz in the 2,100-MHz band, the DoT committee felt it should be Rs 3,800 crore. The Trai’s price is 22 per cent lower than the base price for the same spectrum in a 2010 auction.