First time in four years, India's telecom spectrum auction will kickstart on March 1 for the fourth-generation (4G) mobile networks. The Union Cabinet, on December 16, approved the auction of 2,251 megahertz of the spectrum by the end of FY2020-21 at the reserved price of Rs 3.92 lakh crore.
The government will offer spectrum across seven bands—700MHz, 800MHz, 900MHz, 1,800MHz, 2,100MHz, 2,300MHz, and 2,500MHz, according to a notice issued by the Department of Telecommunications (DoT) in January. The three big telcos - Airtel, Vodafone Idea, and Reliance Jio will participate in the auction. The spectrum bought will be valid for 20 years.
The Earnest Money Deposit (EMD) amount by Reliance Jio is the highest among the bidders at Rs 10,000 crore, earning the highest eligibility points followed by Bharti Airtel at Rs 3000 crore and Rs 475 crore by Vodafone Idea.
The bidders have an option to pay upfront 50 percent of the final bid for 1,800, 2,100, 2,300, and 2,500MHz bands, and the remaining amount can be paid in equated 16 installments over a period of two years at the interest rate of 7.3 percent, following the two years moratorium. For 700, 800 and 900MHz bands, the upfront amount is 25 percent of the successful bid.
The final bidders will also be required to pay three percent of the Adjusted Gross Revenue (AGR) excluding wireline services as spectrum usage charges for the spectrum won through this auction.
Bidders will have to comply with parameters including block size in which bidders will be able to submit their bids, the maximum amount of spectrum that can be held by each bidder after the completion of the auction, roll-out obligations, payment terms, etc, a statement by the government said.
The government allows spectrum sharing between telecom service providers in particular spectrum bands acquired in the auction after one year from the date of ‘Frequency Assignment.'
The auction will not have the high-priced fifth-generation (5G) airwaves. The telecommunication companies have earlier shown reservations over the high prices.
Fitch Ratings had earlier predicted that Bharti and Jio are likely to bid to renew their expiring spectrum in the upcoming auctions in March 2021 and may also bid to acquire spectrum in the sub-1GHz band, which can be used for 5G services, PTI reported.
"We have assumed Bharti will set aside $500 million in FY21 and $1 billion in FY22 for upfront spectrum investments. We believe that the company is unlikely to launch 5G services before 2022," Fitch said.
Amid the COVID-19 pandemic and economic woes, the cash-strapped government is vying to raise funds for the exchequer amid COVID relief measures and increasing fiscal deficit.Disclaimer: “Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.”