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Why this year’s spectrum sale may be a tame affair

Spectrum auctions coming up this year may be a tame affair compared with the record mop-up seen two years ago, two government officials aware of the matter said, given that many telcos have already stocked up airwaves and would only seek to renew licences.

The Department of Telecommunications (DoT) expects at most ₹10,000 crore from the auctions that it plans to hold by the end of FY24, the officials cited above said, which will be a fraction of the record ₹1.5 trillion raised in 2022 when the government sold 72,097.85 MHz in the first-ever sale of 5G airwaves.

Telcos may refrain from buying fresh airwaves, and may focus on renewing licences expiring between February and August this year, the officials said on the condition of anonymity.

“In the last auction where 5G spectrum was put on sale, more than 100 MHz (units) of spectrum was given out to Airtel and Jio. Vodafone also took more than 70 Mhz, which is far higher than the 20–30 Mhz we used to give out in previous auctions. They have large spectrum pools now, so this time, they will go for renewing the older licences that will expire in the 4G bands of 1,800 Mhz and 900 Mhz,” one of the two officials said.

“We don’t expect more than ₹10,000 crore to come from this auction,” the second official said, asking not to be named.

A query emailed to a DoT spokesperson remained unanswered.

The government will not put the 600 Mhz band on sale as it expects little demand for the pricier spectrum, the official added. In 2022, the 700 Mhz band was put on sale and Reliance Jio was the only buyer of 20 Mhz in the band for ₹39,270 crore.

Older telcos are likely to have some licences in the 1,800 Mhz and 900 Mhz bands expiring next month, and they may be given provisional spectrum on the prices determined in the 2022 auction, the first official said, adding the ministry will take cabinet approval to make this temporary exemption in the coming weeks.

The carriers will be asked to pay the auction-determined prices or the balance once the auctions in 2024 are completed.

By the end of January, DoT is expected to issue notice inviting applications (NIA), the legal document which lays down auction rules and process. The exemption is likely to be included within the NIA for this auction. Auctions typically start 45–50 days after the NIA is issued.

The department will also get a go-ahead on reserve prices for the upcoming auctions from the Cabinet, which may be kept at the same level as the 2022 auctions.

V. Raghunandan, secretary at the Telecom Regulatory Authority of India, which recommends pricing of airwaves that are put up for sale to the DoT, had said late last year that the reserve price for the next auction will be based on previous Trai recommendation of 2022.

The Trai had shared in its previous recommendations that if the auction is to be conducted within a year, or within three years, the same pricing of 2022 could be applied by the government. Livemint

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