Spectrum auction poised for Aug-Sept, auctioneers shortlisted

The Department of Telecom is likely to hold the spectrum auction in August-September, but the timeline will not go beyond October. A Cabinet note is being prepared to get approval for the auction.

The department is expected to finalise the auctioneer– agency that will develop and manage software for the auction — by May 22 and the timeline will also depend on the firm selected.

Four bidders have qualified in the technical round, mjunction services Ltd, C1 India Pvt Ltd, MSTC Ltd and e-Procurement Technologies Ltd. mjunction services limited, is a 50:50 venture promoted by SAIL and Tata Steel. C1 India’s claim to fame is its success with an e-procurement project for the Government of Andhra Pradesh in 2002. MSTC Limited (formerly known as Metal Scrap Trade Corporation Limited) is an Indian state-owned e-commerce company based in Kolkata, West Bengal. It is a miniratna category-I public sector undertaking, owned and operated by the Government of India. E-Procurement Technologies Limited, a business management consultant in Ahmedabad, provides software solutions. The company offers procurement process enhancement solutions for government, corporate, and public sector enterprises.

As per the rules finalised by DCC, successful bidders will have to pay 25 percent of the amount upfront for sub 1 GHz, and 50 percent upfront for higher frequency bands. Instalment will be spread over a period of 16 years. There will be a two-year moratorium for payment after the upfront amount is given. This means that instalment will have to be paid from third year, in 16 annual instalments.

Successful bidders will be required to make only 10 percent upfront payment for sub-1 GHz band and 20 percent for above 1 GHz band for the set of spectrum that will not be available after 6 or 12 months and balance before 1 month of their availability, according to the decision taken by DCC.

The auction shall be without the frequency band range of 3,300 -3,600 Mhz band proposed to be used for 5G services. The exclusion of 5G spectrum from the plan has reduced the total value of airwaves to be put on auction to around Rs 3 trillion at the base price.

The Defence Ministry has recently sought allocation of 100 MHz in 3300-3400 Mhz band, for the Indian Navy. The total quantum available with DoT is 300 MHz. Out of the 300 MHz, 25 MHz is reserved for the Department of Space. This leaves only 175 MHz for telecom operators, which is grossly inadequate.

The auction was initially planned for the sale of 8303.05 MHz of airwaves, including 5G spectrum in the 3300-3600 MHz band and 4G spectrum in the 700MHz, 800MHz, 900MHz, 1800MHz, 2100MHz, 2300MHz and 2500MHz bands. The amount anticipated to be raised was Rs 5.23 trillion, if the airwaves are sold at their base price. All three operators have often stated that the base price, Rs 4.92 billion a unit, is too high and not financially viable.

The lack of clarity on whether Chinese vendors, Huawei and ZTE can deploy their next generation mobile communication standard technology in India is still there.

DoT cannot delay the sale of spectrum indefinitely as Bharti Airtel and Vodafone Idea will need to buy back their expiring airwaves around September-October 2021, in eight circles each but mostly in 1800 MHz band, also used for 4G, and Reliance Jio’s 4G spectrum in 800Mhz band, operated under a spectrum sharing pact with Reliance Communications, will expire in 18 circles in July-August 2021.

The DoT has selected 4 bidders on auctioneer– agency that will develop and manage software for the auction.

Trai had in August 2018 recommended auction of about 8,644 MHz of spectrum across bands at an estimated total base price of Rs 4.9 lakh crore. However the industry found that the proposed prices were unaffordable and exorbitant.

In the 5G band in the 3300-3600 MHz (5G), prices had been given for the first time at Rs 492 crore per MHz, for a pan-India minimum block of 20 MHz. For this operators would have to shell out Rs 9,840 crore, which is seen as steep, which telcos found uncompetitive.

The latest developments come after the Digital Communications Commission, the DoT’s highest decision-making body, recently discussed spectrum auctions and resolved to split the next bandwidth sale by only offering 4G airwaves some time this year and 5G bandwidth probably in 2021.

Possibility of auction derailed again

—CT Bureau