The government has tempered its expectation from the spectrum auction for the coming financial year, given that most of the companies in the sector are not in the best of health and may hence not bid aggressively.
The 2018-19 Union Budget presented by Finance Minister Arun Jaitley has set a target of Rs 48,661.42 crore from all the levies the sector is subjected to. This is higher by more than 50 percent from the Rs 30,736.47 crore Jaitley expects to garner from the sector in 2017-18.
The figures mentioned above are marked against ‘other communication services’ in the receipt section of the Budget. Receipts under ‘other communication services' include recurring license fees from telecom services providers and one-time entry fees from new operators.
They also include spectrum charges on the frequencies held by the operators as well as installments paid by them towards the amount for the bids won by them in the previous auctions.
The government had to substantially revise lower its 2017-18 collection target from telecom services to Rs 30,736.47 crore from Rs 44,342.20 crore it eyed earlier, a reflection of the stress in the sector due to high competitive intensity.
With the 2018-19 collections targeted to be just a little higher than 50 percent, it can be safely assumed that the government is keeping its expectations modest. There was no spectrum auction in 2017-18. A more than 50 percent jump, at the same time, indicates that an auction is very much on the government’s agenda in the coming financial year. It had collected Rs 70241.14 crore in telecom levies in 2016-17. That was the year when the spectrum auction last took place.
A reference, sent by the department of telecommunications, is already lying with the telecom regulator to give its recommendations on the pricing of spectrum. TRAI is currently undergoing a consultation process with all stakeholders on auction of as many as nine bands -- 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz, 3300-3400 MHz and 3400-3600 Mhz.
Ever since the 2G spectrum case of 2008, DoT, on the advice of TRAI, has kept the spectrum prices high in successive auctions. But the recent acquittal of former telecom minister by the 2G trial court might just have eased the matters a little for the authorities on correctly pricing the spectrum. What will also weigh on TRAI’s mind is the October 2016 auction of 700 Mhz band that found no takers despite the frequency being the most coveted.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
