Incumbent GSM operators will have to bid in the upcoming auction even if they just want to retain up to 2.5 MHz in the 900 MHz band paying the auction determined market price.
The Empowered Group of Ministers (EGoM) on telecom, in its meeting last week, has decided retention of the prescribed limit of spectrum would be applicable on incumbent operators in Delhi and Mumbai circles solely by means of participation and bidding in the coming auction of the 900 MHz and 1,800 MHz bands. And, all the operators would have to pay the market price that would be discovered in the auction.
“Companies would need to indicate their options at each price level as the auction proceeds,” according to a top official at the department of telecommunication.
This would essentially ensure that the circles, which did not receive any bids in the November auction, get bidders and the auction does not fail.
Last month, the EGoM had decided to allow incumbent operators to retain up to 2.5 MHz of spectrum in the 900-MHz band and the rest would be refarmed to the 1,800-MHz band.
But, the operators would have to pay the auction-discovered price. The incumbent operators would go for renewal of their 20-year licences between 2014 and 2016.
Also, all the operators having spectrum in the 1800 MHz band will be imposed a one-time fee for the airwave they hold beyond 4.4 MHz (2.5 MHz for CDMA).
Last week, the EGoM has decided to reduce the reserve price of the 1,800-MHz band by 30 per cent for four circles that did not attract bidders in the November auction. It has also decided to conduct auction of the 900-MHz spectrum in the Delhi, Mumbai and Kolkata circles. Both auctions would be held simultaneously
Incumbent operators who hold spectrum in the 900 MHz band but did not retained, will now be given an option to have an equal quantum of spectrum in the 1800 MHz band at the auction-determined price. This would be additional spectrum to their existing holding in the 1800 MHz band for renewal (within the prescribed limit of 4.4 MHz).
The four circles — Delhi, Mumbai, Karnataka and Rajasthan, where the reserve price was revised, in the 1,800-MHz band accounted for about 50 per cent of the pan-Indian reserve price. The price for the 900-MHz band spectrum would be double of the auction-discovered price of 1,800 MHz spectrum. The price would be double the base price in circles that didn’t get bidders.
The government has effectively reduced the pan-India reserve price to about Rs 12,000 crore, from the Rs 14,000 crore fixed for the November auction. Considering that the government sells all the available spectrum in these circles, it would get Rs 9,529.12 crore, at the revised price. However, analysts have said that the 30 per cent cut in the reserve price is not enough and the upcoming auction may not be a success.
Interestingly, the government would have about 9-11 MHz of spectrum in the 900 MHz band for auction after refarming, in eight of the country’s 22 key telecom circles.
The circles that can be covered include Delhi, Mumbai, Maharashtra, Gujarat, Andhra Pradesh and Karnataka. In four other circles — Madhya Pradesh, Kerala, Haryana and Rajasthan — spectrum up to 7.2 MHz will be available for auctioning.
