Union Cabinet gives approval for largest ever spectrum auction

The latest development in the Union Cabinet is the approval of the largest ever telecom spectrum auction, which is targeted to fetch at least Rs. 64,840 crore from its sale next month.

The Government intends to sell 380.75 MHz of the second generation (2G) spectrum in three bands. One is the 900 MHz, followed by 1800 MHz and lastly the 800 MHz. The 2100 MHz spectrum may also be put on auction after Defence Ministry vacates it.

A n official from TRAI said that the Cabinet which is headed by Prime Minister Narendra Modi, approved a reserve price of Rs. 3646 crore pan-India per MHz in 800 MHz, Rs 3980 crore for 900 MHz band excluding Delhi, Mumbai, Kolkata, and J&K; Rs 2191 crore pan India (excluding Maharashtra and West Bengal) in 1800 MHz band.

The reserve price for 2,100 MHz was not announced. According to reports the Government has garnered about Rs 62,162 crore from the last auction in February 2014. It was also told that proceeds from this year's auction will help government reach its fiscal deficit target of 4.1 per cent of GDP.

According to the tentative timelines of the Department of Telecommunications (DoT) the last date for submission of application is February 2. The auction will start on February 23.

Sources also mentioned that Telecom Minister Ravi Shankar Prasad said the government intends to auction third generation or 3G spectrum in 2,100 MHz simultaneously.

The February auction intends to provide adequate spectrum, prevent hoarding, fair competition and improve telecom services for consumers and adequate revenue for government.

The reserve or auction start price that is approved is the same as the one recommended by the Telecom Commission, except in the case of 900 MHz. The Telecom Commission earlier proposed a reserve price of Rs 3,695 crore for each MHz in 900 Mhz. Against this the Cabinet approved a reserve price of Rs 3980 crore.

The spectrum is expected to bring revenues of Rs 64,840 crore (excluding 2100 MHz spectrum) of which Rs 16,000 crore is expected to be realized in the current financial year.

During the last auction of reserve price, airwaves were valued at roughly Rs 48685 crore. The Government had put a block of 385 MHz of radiowaves in 1800 MHz band, and 46 MHz in 900 MHz band. During that auction, the entire spectrum in 900 MHz band was sold but the 78 Mhz in 1800 MHz band remained unsold.

The eligibility of the auction is not restricted. Any company holding a universal service license to provide telephonic services can bid this year’s auction.

It must be noted that successful bidders have to pay within 10 days 33 per cent of the final sale price in case of 1800 MHz. The same is 25 per cent in case of 900 MHz and 800 MHz.

In the 800 MHz band, the 103.75 MHz in all service areas is going to put on auction while the177.8 MHz in the 900 MHz band will be sold in 17 telecom circles or service areas. Meanwhile, the 99.2 MHz will be auctioned in 15 circles in 1800 MHz band.

There is a different price spectrum for each of the 22 telecom service areas in the country.

The report also mentioned that there were no buyers for the CDMA spectrum in November 2012 auction as companies felt spectrum price was too high to make a business case.

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