The Union Cabinet on Monday approved the largest ever telecom spectrum auction that is targeted to fetch at least Rs.64,840 crore from the sale next month.
The government will sell 380.75 megahertz of second generation (2G) spectrum in three bands — the premium 800 MHz, 900 MHz and 1800 MHz. Spectrum in 2100 MHz may also be put on auction simultaneously after Defence Ministry vacates it.
Reserve price
The Cabinet, headed by Prime Minister Narendra Modi, approved a reserve price of “Rs.3,646 crore pan-India per MHz in 800 MHz, Rs.3,980 crore for 900 MHz band pan-India excluding Delhi, Mumbai, Kolkata, and Jammu & Kashmir; Rs.2,191 crore pan-India (excluding Maharashtra and West Bengal) in 1800 MHz band,” an official statement said here on Monday.
The reserve price for 2,100 MHz was not announced.
The government had garnered about Rs.62,162 crore from the last auction in February, 2014.
Proceeds from this year’s auction will help government reach its fiscal deficit target of 4.1 per cent of GDP.
As per the tentative timelines drawn by the Department of Telecommunications (DoT), the last date for submission of application is February 2, and bidders will be pre-qualified by February 13. The auction will start on February 23.
Telecom Minister Ravi Shankar Prasad said the government intended to auction third generation or 3G spectrum in 2,100 MHz simultaneously.
The focus of the February auction, he said, “is to provide adequate spectrum, prevent hoarding as well as fair competition, improve telecom services for consumers and adequate revenue for government.”
The reserve or auction start price approved on Monday is the same as the one recommended by the Telecom Commission, except in the case of 900 MHz. The Telecom Commission had proposed a reserve price of Rs.3,695 crore for each MHz in 900 Mhz. Against this, the Cabinet approved the reserve price of Rs.3,980 crore.
“The estimated revenues from this auction are Rs.64,840 crore (excluding 2100 MHz spectrum), of which Rs.16,000 crore is expected to be realised in the current financial year,” the statement said.
At the reserve price of last auction, airwaves were valued at about Rs.48,685 crore. The government had put on the block about 385 MHz of radiowaves in 1800 MHz band, and 46 MHz in 900 MHz band. During that auction, all spectrum in 900 MHz band got sold but 78 Mhz in 1800 MHz band remained unsold.
Any company holding a universal service licence to provide telephony services or eligible to obtain the same, can bid in this year’s auction.
Successful bidders have to pay within ten days 33 per cent of the final sale price in case of 1800 MHz. The same is 25 per cent in case of 900 MHz and 800 MHz, the statement said.
Two-year moratorium “There shall be a moratorium of two years for payment of the balance amount of one-time charges for the spectrum, which shall be recovered in ten equal annual instalments,” it said.
In 800 MHz band, 103.75 MHz in all service areas is being put on auction while 177.8 MHz in 900 MHz band is being sold in 17 telecom circles or service areas. 99.2 MHz will be auctioned in 15 circles in 1800 MHz band, it said.
There are total 22 telecom service areas in the country, and the price of spectrum in each circle is different.
The Telecom Commission has recommended auctioning 184 Mhz in 900 Mhz band across 18 service areas and 100.2 Mhz in 1800 Mhz band in 15 service areas. The quantum of spectrum for auction in 1800 Mhz has been reduced by the Cabinet.
The 900 Mhz and 1800 Mhz band are used for providing GSM based mobile services by companies like Airtel, Vodafone, Idea, Uninor. The 800 Mhz band is used for CDMA based mobile services by companies like MTS, Tata Teleservices and Reliance Communications.
