The Department of Telecom is expected to issue the notice for upcoming spectrum auction this week that will have timelines and rules to bid for airwaves. The Union Cabinet approved a proposal for the auction of 2,251.25 Megahertz (MHz) of spectrum worth Rs 3.92 lakh crore at the base price on December 17, 2020.
The DoT was expected to issue the Notice Inviting Application (NIA) for the auction in December but due to an emergency engagement of a top authority it got delayed. "The NIA is almost ready. It should be out this week," a DoT official, who did not wish to be named, told PTI.
2021 to ring in spectrum auctions, potential tariff hikes for telecom sector
The Digital Communications Commission, the apex decision making body of the DoT, in May last year approved the spectrum auction plan worth Rs 5.22 lakh crore which included radiowaves for 5G services as well. A part of the 300 MHz of spectrum identified by the DoT for 5G services is being used by the Navy, and the Department of Space has also made claims on a significant portion of these radio waves. The industry has also been demanding the government to lower the base price of 5G spectrum as each operator will need to shell out around Rs 50,000 crore for the required quantum of radio waves for the next generation services.
In addition to the bid amount, successful bidders will also have to pay three per cent of the Adjusted Gross Revenue (AGR), excluding wireline services, as spectrum usage charges for the spectrum won through this auction. Successful bidders may pay entire bid amount in one go (upfront). They can also exercise an option to pay a certain amount (25 per cent for spectrum won in 700 MHz, 800 MHz, 900 MHz bands or 50 per cent for spectrum won in 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz bands) upfront and the remaining amount in a maximum of up to 16 equated annual instalments after a moratorium of two years.
The upcoming spectrum auction to be held in March may not see aggressive response from the industry and bids may be in the range of Rs 30,000 crore to Rs 50,000 crore for the radiowaves valued at around Rs 3.92 lakh crore, according to analysts. Market experts believe that telecom operators are likely to focus on renewal of spectrum and Vodafone Idea may not participate in the auction for renewal of their spectrum in some circles.
According to Icra, it does not foresee any major participation in the 700 MHz band and pegged the bids to be in the range of Rs 55,000-60,000 crore. JM Financials, on the other hand, expects bids to be in the range of Rs 30,000 crore only.
Bharti Airtel has 12.4 MHz of spectrum in 900 MHz band and 47 MHz in 1800 MHz band, and Reliance Communications' 44 MHz of spectrum in 800 MHz band, being used by Reliance Jio, is coming up for renewal. Vodafone Idea needs to renew 6.2 MHz of spectrum in 900 MHz band and 38.2 MHz in 1800 MHz band.
According to Credit Suisse, renewal of these spectrum frequencies will cost around Rs 15,000 crore to Bharti Airtel and Rs 11,500 crore to Reliance Jio.
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!
