Gearing up for the biggest auction of mobile phone radiowaves in the country, government cleared sale of spectrum in seven frequencies estimated to be worth about Rs 5.6 lakh crore.
The auction will help operators augment expansion of high-speed 4G voice and data services in the world's second largest mobile phone market by users after China.
"This may be the largest ever auction in history of the country. It has been approved," Finance Minister Arun Jaitley told reporters after the meeting of the Cabinet headed by Prime Minister Narendra Modi. He however did not give timelines for the auction.
Spectrum will be sold in the following bands: 700 Mhz, 800 Mhz, 900 Mhz, 1800 Mhz, 2100 Mhz, 2300 Mhz and 2500 MHz.
Jaitley said the government has decided to refer back to the sectoral regulator TRAI the issue of spectrum usage charge (SUC) paid by operators.
The Telecom Regulatory Authority of India (TRAI) had proposed a 3 per cent of annual revenue of operators as SUC, a recommendation that inter-ministerial panel Telecom Commission also backed.
However, the government's chief law officer Mukul Rohatgi opined against hiking SUC for broadband wireless access (BWA) providers such as Mukesh Ambani's Reliance Jio Infocomm from the current 1 per cent.
Jaitley said opinion of TRAI will be taken again as AG opinion came later.
Sources said TRAI is likely to give its recommendation in one month.
In the upcoming auction, more than 2,300 MHz of airwaves will be on the block for telecom operators in seven bands -- 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz and 2,500 MHz.
Of the Rs 5.66 lakh crore expected from the auction, the government would get Rs 64,000 crore this fiscal as part of staggered payment schedule. Another Rs 98,995 crore would come from various levies and services in the telecom sector.
The government had got Rs 1.1 lakh crore from sale of spectrum in March 2015.
Lock-in period for trading in spectrum won under the auction has been reduced to 1 year from 3 years at present, a move that will encourage consolidation in the telecom industry."I think we would see some demand maybe in 2100 MHz, we will see obviously see the takeoff of 1800 MHz. But 700 MHz is fairly unchartered," Prashant Singhal of EY India told CNBC-TV18.He added that the government was unlikely to raise its targetted Rs 55,000-56,000 crore through the sale."The sector is already in a debt of almost USD 50-60 billion today. So, getting a further commitment of USD 10 billion is going to be very difficult at this stage," he said.He maintained that companies that invest in the efficient but new 700 Mhz spectrum would see return on investments only after three-four years. "So 4G is taking off, no doubt about it, but I think we still are a few years away from rampant growth," according to Singal.- With inputs from CNBC-TV18.
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