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The next round of spectrum auction, in February 2015, will add at least Rs 50,000 crore to the exchequer if the government manages to sell all that is available at the base price suggested by the Telecom Regulatory Authority of India.
This means, the department of telecommunications (DoT) will garner 78.6 per cent more than it had estimated in the Budget target from this sale for the current financial year. The earning projection has jumped up for two reasons — DoT will auction more of airwaves if it follows Trai’s suggestions and the regulator has recommended an increase of 10 per cent in the base price of the 1800-MHz band.
As companies get the option to pay a third of the final bid amount in the first year, in deferred payment, sale of all available spectrum at the Trai reserve price will add Rs 16,710 crore to the exchequer (a third of Rs 50,132 crore) in 2014-15. The Budget target was Rs 9,355 crore.
Also, Trai has suggested sale of additional spectrum for commercial use across bands.
Cellular operators whose licences will be due for renewal in 2015-16 together hold 172-MHz of airwaves in the 900-MHz band and 26 MHz in the 1800-MHz band. After Trai’s suggestions, DoT will be able to auction 204.04 MHz airwaves in the 900-MHz band, and 150.2 MHz in the 1800-MHz band. Availability in 900-MHz increased as the regulator has suggested 1.2 MHz in the 900-MHz band be taken back from Bharat Sanchar Nigam Ltd (BSNL) in all circles where licences will expire in 2015-16, except in Punjab. In return, BSNL should be allotted 1.2 MHz in the 1800-MHz band in each circle, subject to some conditions.
DoT had included sale of 800-MHz spectrum in its Budget estimates. The projected earning of Rs 16,710 crore only covers only sale of available spectrum in the 1800-MHz and 900-MHz bands.
The successful auction in February 2014 generated a total bid value of Rs 61,162 crore, by selling 46 MHz of airwaves in the 900-MHz band and 307 MHz spectrum in the 1,800 -Hz band.
Trai, which suggested a base price in 1800 MHz at Rs 2,138 crore for one MHz across 20 service areas, has recommended raising reserve prices in odd circles, and not in the metro circles where teledensity is high. The regulator has suggested the highest increase of base price for the Jammu & Kashmir circle, at 310 per cent from the latest winning price in the previous auction. It also suggested a 134 per cent increase in reserve price for the Rajasthan zone, followed by 57 per cent in the Northeast, 51 per cent in Uttar Pradesh (East), 50 per cent in Himachal Pradesh, 44 per cent in Kerala, Bihar and Odisha, 37 per cent in Madhya Pradesh, 31.4 per cent in Punjab and 18.5 per cent in Haryana.
Trai has suggested a reserve price of the 900 MHz band spectrum at Rs 3,004 crore for one MHz in 18 circles. This excludes Delhi, Mumbai, Kolkata (where auction has already been conducted) and Jammu & Kashmir (where none is available in this band).
The government’s income will increase manifold once it finalises the auction of 2100 MHz spectrum (3G band) for commercial use. Adoption of the extended GSM band, as suggested by Trai, by taking spectrum out of the 800 MHz band, will do likewise.
Rajan Mathew, director general, Cellular Operators Association of India, said: “The regulator has recognised the need for additional spectrum for commercial use, including the 2100 MHz band and the EGSM band. The proposal to free-up additional spectrum across bands for commercial use would be helpful for the industry. On the pricing front, we’ll have to take a closer look.”
