Govt. to discuss mega-spectrum auction plan

The Dollar Business Bureau

The government on Wednesday said it would discuss the mega-spectrum auction plan for the sale of airwaves worth Rs.5.66 lakh crore.

"The Cabinet is likely to take up spectrum auction proposal and the timeline for auction will be prepared after Cabinet approval," according to PTI. The Centre may raise almost Rs.64,000 crore by auctioning around 2300 Mhz of spectrum and Rs.98,995 crore from several taxes and services in the telecom sector.

The notice inviting application is expected to be issued by July 1, followed by a pre-bid conference on July 6 and bidding from September 1. According to the inter-ministerial panel, the auction would put into sale the premium 700 Mhz band worth Rs.11,485 per Mhz. The mobile services’ delivering cost in this band will be around 70% lower than 2100 Mhz band, used for providing 3G services.

The possible revenue of Rs.5.66 lakh crore from the spectrum sale is more than the double of telecom services industry’s gross revenue of Rs.2.54 lakh crore reported in 2014-15 fiscal.

Some operators requested to defer the sale of 700 Mhz spectrum and said the ecosystem for providing services was yet to be developed, and its sale may lead to under utilisation of the spectrum for many years and block the industry's fund.

“The total recommended reserve price for the auction is almost double the cost of all spectrum investment to date in India and more than 20 times the annual free cash flow of the entire mobile industry,” GSMA said.

The panel has recommended severe payment conditions from all the operators as formulated by the Telecom Regulatory Authority of India (Trai) and  has also favoured companies winning spectrum in higher frequency bands.

In earlier auctions, companies were given the option to make 33% upfront payment.