Stage set for biggest spectrum auction

PTI

New Delhi, 23 Jun 2016: The stage is set for the biggest auction of telecom spectrum in the country after the Cabinet on Wednesday approved the sale of mobile phone radio waves in seven frequencies. 

 

The government is expecting around Rs 5.6 lakh crore through the auction.

 

The auction will not only end the shortage of spectrum, but will also help operators to address call drop problem, expansion of high-speed 4G voice and data services, and expansion of the NDA government’s ambitious Digital India programme. 

 

“This may be the largest ever auction in history of the country. It has been approved,” Finance Minister Arun Jaitley told reporters after the Cabinet meeting. However, the government did not share timeline for the auction. 

 

More than 2,300 MHz of airwaves will be put on the block in seven bands–700 MHz (4G and advance), 800 MHz (2G,4G), 900 MHz (3G, 4G), 1,800 MHz (2G,4G), 2,100 MHz (3G), 2,300 MHz (4G) and 2,500 MHz (4G).

 

Of the Rs 5.66 lakh crore expected from the auction, the government would get Rs 64,000 crore this fiscal from upfront payment as part of a staggered payment schedule. 

 

Overall, Rs 98,995 crore would come from various levies and services in the telecom sector in the current fiscal, including the upfront payment. In the 2015 auction, the government got Rs 1.1 lakh crore.

 

Earlier, the Telecom Regulatory Authority of India (Trai) had recommended a pan-India reserve price of Rs 2,873 crore for spectrum in 1,800 MHz band; Rs 3,341 crore for 900 MHz; Rs 5,819 crore for 800 MHz; Rs 3,746 crore for 2,100 MHz; Rs 11,485 crore for 700 MHz and Rs 817 crore each for 2,300 MHz and 2,500 MHz bands.

 

At Rs 11,485 crore for 1 MHz, the 700 MHz band is the most expensive. This makes the industry liable to pay Rs 57,425 crore for 5 MHz band on pan-India basis. The cost of delivering mobile services in this band is around 70% lesser than the 2,100 MHz band used for providing 3G services. 

 

When asked what kind of response was expected from the industry, Telecom Minister Ravi Shankar Prasad said: “The appetite for India’s telecom sector is very big.” 

Spectrum usage charge 

On the issue of spectrum usage charge (SUC) paid by operators, Jaitley said the government has decided to refer it back to Trai, which had proposed 3% of annual revenue of operators as SUC. 

 

However, Attorney General (A-G) Mukul Rohatgi opined against hiking SUC for broadband wireless access (BWA) providers such as Mukesh Ambani’s Reliance Jio Infocomm from the current 1%. To this, Jaitley said Trai opinion will be taken again as A-G’s opinion came later.