More than 10 players, including several international investment bankers, have expressed interest in conducting the proposed spectrum auction in the 1,800-MHz and 800-MHz band. Auctioneers can approach the Department of Telecommunications (DoT) till May 15 with their queries regarding the modalities on the sale of telecom spectrum. Already 11 companies are learnt to have informally intimated the government about their participation. Experience in e-auction seems to hold the maximum weightage for a prospective auctioneer in the bid process.
Among other objectives, the DoT has stated in the RFP (request for proposal) document that auctioneers must look at optimising the revenue received in the spectrum sale process and creating appropriate market interest and excitement both in India and abroad. Those expected to be in the potential auctioneers’ list include Morgan Stanley, Deutsche Bank, Rothschild India and DotEcon. DoT officials and likely bidders remained tight-lipped on the developments related to the spectrum auction.
The RFP document is quiet on the quantum of spectrum to be sold through the auction process. While it speaks about conducting the first simultaneous, ascending e-auction of spectrum in all the 22 telecom service areas within three months from the signing of contract, it adds that the auctions would thereafter be conducted from time to time within a period of one year as per the need, and depending upon the availability of spectrum in different telecom service areas. According to the bid document, in case DoT identifies more number of blocks of spectrum in a particular service area subsequent to the completion of e-auction process of that area, the government may ask the successful auctioneer to again conduct the e-auction of that area, with an additional payment.
It makes clear the weightage given to different parameters in the technical bid. Only those bidders scoring 70 per cent and above on the weightage criteria will be declared technically qualified, indicating the strong focus on experience of e-auction for the bidders.
It will be following the eligibility screening based on networth and paid-up capital of a company that bids would be taken up for technical and financial rounds. In its financial bid, the bidder shall quote its fee as a percentage of the difference between the winning bid and the reserve price.
The DoT has come up with a drop-dead fee — of Rs 2.5 lakh per service area — to be paid to the successful auctioneer in case the government abandons the auction at any stage after the award of the contract in one or more or all of the service areas. The same will apply in case the winning bid received is above the reserve price, but not acceptable to the government or the winning bidder in the auction of spectrum fails to pay the bid amount. However, in case the government abandons the auction, the total drop-dead fee will be limited to Rs 10 lakh.
The bid document has clarified that the DoT reserves the right to accept or reject any bid without assigning any reason.