The Union Cabinet on Wednesday approved the mega spectrum auction plan, which is estimated to fetch about Rs. 5.66 lakh crore to the exchequer.
“Yes, spectrum auction proposal has been cleared,” an official source said.
The main document of auction, notice inviting application, is likely to be issued by July 1, followed by pre-bid conference on July 6. Bidding is expected from September 1. The plans are yet to be confirmed officially, sources said.
As per the rules approved by an inter-ministerial panel, the auction would include the sale of the most premium 700 MHz band at a reserve price of Rs. 11,485 crore per MHz. The cost of delivering mobile services in this band is estimated to be around 70 per cent lower than the 2100 MHz band, used for providing 3G service.
A company interested in buying spectrum in the 700 MHz band will need to shell out a minimum of Rs. 57,425 crore for a block of 5 MHz on a pan-India basis. This band alone has the potential to fetch bids worth over Rs. 4 lakh crore.
The total potential revenue of Rs. 5.66 lakh crore from the spectrum sale is more than double of the telecom services industry gross revenue of Rs. 2.54 lakh crore reported in 2014-15.
Leading operators have sought deferring the sale of the 700 MHz spectrum, saying the ecosystem for providing services in this band is not developed and would lead to underutilisation of the spectrum for several years, blocking the industry’s funds.
The panel has also suggested stringent payment conditions compared to a liberal method suggested by the Telecom Regulatory Authority of India.
The panel has favoured that companies winning spectrum in higher frequency bands above 1 GHz should make 50 per cent upfront payment and the rest in 10 years after a two-year moratorium. In earlier auctions, companies were given option to make 33 per cent upfront payment.
For spectrum below 1 GHz band such as 700 MHz, 800 MHz, 900 MHz, companies will be required to pay 25 per cent upfront and the rest in 10 years after a two-year moratorium. It is in line with practice of earlier auctions but differs from the TRAI suggestion.
