The Union Cabinet has approved the telecom spectrum auction that is targeted to fetch at least Rs.648.4 bn from its auction sale to be held in the month of February 2015. The Government had received Rs.621.62 bn in revenues from the last auction that was held in February 2014. Revenues from the auction will help reduce the fiscal deficit of the Government that is expected to be contained at 4.1% of the GDP at the end of March 2015.
The Government would be totally receiving Rs.1000 bn from the auction that is being held in the month of February 2015 but in the current fiscal they would receive an amount of Rs.250 bn as an initial amount from the successful bidders.
The government will auction 380.75 megahertz of second generation (2G) spectrum in three bands – the premium 900 MHz, 1800 MHz and 800 MHz. The government intends to auction the third generation or 3G spectrum in the 2,100 MHz simultaneously after the Defence Ministry vacates it.
The Cabinet has approved a reserve price of Rs.36.46 bn pan-India per MHz for the 800 MHz band, Rs.39.8 bn for the 900 MHz band pan India excluding Delhi, Mumbai, Kolkata, and J&K and Rs.21.91 bn pan India (excluding Maharashtra and West Bengal) for the 1800 MHz band.
Successful bidders have to pay within 10 days 33% of the final sale price in case of 1800 MHz. The same is 25 per cent in case of 900 MHz and 800 MHz. There shall be a moratorium of two years for payment of balance amount of one time charges for the spectrum, which shall be recovered in 10 equal annual instalments.
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. 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 Cabinet. There are total 22 telecom service areas in the country and the price of spectrum in each circle is different.
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. The spectrum in 900 MHz held by Airtel, Vodafone, Idea and Reliance Communication through their licences is expiring in 2015-16 that are being put up for the auction.
The Department of Telecommunications (DoT) has announced the last date for submission of application to be 2nd February 2015 and bidders would be pre-qualified by 13th February 2015. The auction is expected to start on the 23rd of February 2015.