Much awaited telecom spectrum auction begins

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SME Times News Bureau | 04 Mar, 2015
The much-awaited auctions for spectrum or airwaves for the 800 MHz, 900 MHz, 1800 MHz and 2100 megahertz (MHz) bands began Wednesday morning with eight companies in the fray.

"The auction process has started smoothly," a source told media.

The eight telecom service providers participating are Reliance Communications, Reliance Jio, Bharti Airtel, Vodafone India, Tata Teleservices, Uninor, Idea Cellular and Aircel.

These eight companies have submitted an earnest money of Rs.20,435 crore.

The Department of Telecom (DoT) has selected Kolkata-based mjunction services - an information technology and internet company promoted 14 years ago as a 50:50 venture by Steel Authority of India Ltd and TATA Steel - for conducting the spectrum auction.

The auction will take place between 9 a.m. to 7.30 p.m. Monday to Saturday.

The total spectrum put to auction is 103.75 MHz in 800 MHz band, 177.8 MHz in 900 MHz band and 99.2 MHz in 1,800 MHz band - a total of 380.75 MHz in 800, 900 and 1,800 MHz.

The government will also put on sale 5 MHz in the 2,100 MHz band, which is used for 3G services in 17 out of 22 telecom areas.

The reserve price approved is Rs.3,646 crore pan-India per MhZ in 800 MHz, Rs.3,980 crore for 900 MHz band pan-India, and Rs.2,191 crore pan-India in 1,800 MHz band. The government also approved a reserve price of Rs.3,705 crore per megahertz for third generation services.

As per estimates, at the base price alone, the auction will translate into some Rs.82,000 crore, even as the actual process is estimated to fetch around Rs.100,000 crore.

In December 2015, seven licences each of Idea Cellular and Reliance Communications, four licences of Bharti Airtel and six licences of Vodafone will complete their 20-year term after which they have to be renewed. In total, there are 29 licences in 18 service areas which expire in 2015-16.

The other telecom operators who are not participating in the auction are Sistema Shyam TeleServices Ltd, which provides services under the brand name MTS, Videocon Telecom and state-owned BSNL and MTNL.

The service providers will bid using fixed internet protocols (IP) as dynamic IP addresses are not allowed.

The objectives of the auctions are to obtain a market determined price of spectrum in the bands through a transparent process, ensure efficient use of spectrum and avoid hoarding, stimulate competition in the sector, promote rollout of the respective services and maximise revenue proceeds from the auctions within the set parameters.

The finance ministry is expected to closely watch the e-auction of radio frequency spectrum for telecom operators as it is crucial for the government to be able to meet its fiscal deficit target of 4.1 percent of GDP.

For the record, the matter of auction was under litigation even before it began. But the Supreme Court has permitted the Department of Telecom to go ahead with the process from March 4 and await its directions before finalisation.