The government will commence bidding for the subsequent round of spectrum auction from March 1, for which airwaves worth Rs 3.92 lakh crore is place on the block. A total of 2,251 MHz spectrum in seven bands ranging from 700 MHz to 2500 MHz will be auctioned. The airwaves for 5G will not be auctioned this time. As per a notice inviting application (NIA) issued by the Department of Telecommunications (DoT), the final date to apply for the auction is February 5. The objectives of the government for the auction consist of getting a marketplace-determined price tag for spectrum, making sure effective use spectrum and steer clear of hoarding, stimulate competitors in the sector and maximizing income proceeds.
The Cabinet in December had cleared the modalities for the auction. Despite repeated requests from the market, the government has not decreased the reserve rates for the spectrum. The Telecom Regulatory Authority of India (Trai) in August 2018 had advisable reserve price tag for the subsequent round of auctions, which had been significantly decrease than what was fixed for the 2016 auctions but it was nonetheless observed on the greater finish, thinking of the industry’s monetary position.
In the premium 4G spectrum (700 MHz), Trai had decreased the reserve price tag by 43% compared to 2016 auctions, at Rs 6,568 crore per MHz, for a pan-India 5 MHz block, nonetheless, operators would have to shell out Rs 32,840 crore, which is observed as rather higher. In the 2016 auctions, the government had mopped a total quantity of Rs 65,789 crore, 4% more than the reserve price tag, from the country’s six operators who participated in the bidding. However, this was a lukewarm response as only 965 MHz spectra got sold against a total of 2,353 MHz place up on sale, which means that only 40% got sold.
For this round of auction, offered the precarious monetary situation of telcos, the government has decided to give a two-year moratorium for generating balance payments. For spectrum bands in 700 Mhz, 800 MHz and 900 MHz, an upfront payment amounting to 25% of the winning quantity has to be paid upfront whilst the remaining can be paid in 16 instalments following a two-year moratorium. A 7.3% price of interest will be charged for the instalments. For bands above 1 GHz like 1800 Mhz, 2100 MHz, 2300 Mhz and 2500 MHz, 50% upfront quantity has to be paid whilst the remaining can be paid in 16 instalments.
Reacting to NIA, market body COAI mentioned the auction will allow the market to cater to the exponential raise in information usage which will facilitate in supporting the Digital India vision. “While the government has addressed the requirement for the availability of more spectrum, lowering the reserve prices would have provided additional resources for network expansion to the telcos. High reserve prices in past auctions have resulted in large amounts of spectrum remaining unsold. We hope the Govt. will take additional measures to boost the financial health of the industry, which is the backbone of a digitally connected India,” COAI DG SP Kochhar mentioned.