Ministry Preparing Spectrum Auction Bid Document

The Telecom Ministry is in the process of drafting the notice inviting applications (NIA), or the bidding document, which could be issued in September for the spectrum auction to be held in November, according to official sources here.

The sources said the NIA is being concurrently prepared alongside other key programmes of the ministry, including the allotment of 5G trial spectrum.

As per the ministry’s timeline, the NIA is to be issued in September for the auctions in November.

The Telecom Regulatory Authority of India (Trai) had recommended auction of about 8,644 MHz of telecom frequencies at an estimated total base price of Rs 5 lakh crore, which includes radio waves for 5G services.

India wants 5G services to be rolled out in 2020 along with the global launch of the high speed service by telcom companies.

Asked if there will be any revision in 5G spectrum prices as sought by industry citing foreign examples like South Korea, the sources noted that as in the way telcos are undertaking public and rights issues to fund expansion, upgrading their networks and competing among themselves, they will similarly have to budget for 5G spectrum auction funds.

The industry has expressed its inability to buy airwaves at such high costs.

For the 5G spectrum in the 3300-3600 megahertz (Mhz) band, Trai has recommended a reserve price of Rs 492 crore per Mhz for a minimum pan-India block of 20 Mhz, for which an operators will have to shell out Rs 9,840 crore that they consider as being quite steep.

The government had earlier asked Trai to look at reducing the price of 700 Mhz spectrum, following which Trai had cut its base price by 43 percent from Rs 11.485 crore per megahertz.

If government offers all the 8,366 Mhz of spectrum in the auction then the next auction could generate about Rs 5,06,110 crore for the government if all the spectrum is successfully sold at the base price.

In the 2016 auction, the government could manage only Rs 65,789 crore as the revenue projections were built on the 700 Mhz plank which went unsold due to high price. This could be India’s largest auction in terms of the quantum of airwaves on offer.

Airwaves across the 4G bands of 700 Mhz, 800 Mhz, 900 Mhz, 1,800 Mhz, 2,100 Mhz, 2,300 Mhz and 2,500 Mhz, besides 5G spectrum in the 3,300-3600 Mhz bands, will be offered to Vodafone Idea, Bharti Airtel and Reliance Jio.

Except Jio, and Airtel at a much lesser extent, no other telcom company is currently making profit. Besides reduced 5G airwave prices, the telcos also want reduction in licence fees and spectrum charges.

The industry has a debt of over Rs 7 lakh crore, which it attributres primarily to the historically high spectrum prices.

As per the sources, it is unlikely that so many of the industry’s conditions will be met at one go.―Business Standard