DoT defers 2G auction till Feb 3

Auction of 1800MHz & 900Mhz bands to start as single process, bidders will have to apply by 15 Jan, instead of 4 Jan as DoT had stated earlier

The government has decided to defer the auction of 2G spectrum by about 10 days. The Department of Telecommunications (DoT), on Saturday, stated that the auction would start on February 3, 2014, instead of January 23 as stated earlier.

The DoT has also decided to permit withdrawal of bid applications before the auction starts. Applicants can withdraw bid applications on or before January 27. This option was not there in the original Notice Inviting Applications (NIA). With this option, companies can withdraw bids before auction if they do not get contiguous spectrum in the circles they would like to bid.

Auction of 1800MHz and 900MHz bands will commence as a single process, and interested operators will have to apply on or before January 15, instead of January 4 as the DoT had stated earlier in the NIA.

The DoT will publish the final list of bidders on January 29, while a mock auction will take place on  January 30-31.

Earlier this week, top executives of leading GSM operators — Bharti Airtel, Vodafone India, Idea Cellular and Uninor — wrote to the Prime Minister’s Office, the finance minister, the telecom minister, the Planning Commission, and all the members of the Empowered Group of Ministers (EGoM) on telecom, asking the government to finalise the much-debated issue of spectrum usage charges (SUC), which is a part of the operator’s revenue, before the forthcoming auction, as companies would need to factor in the SUC. They asked the government to introduce a flat SUC as recommended by the Telecom Regulatory Authority of India (Trai), which an internal committee of the DoT has opposed. Trai has suggested a uniform SUC at 3 per cent while companies pay between 1-8 per cent of revenue as SUC at present.

The government has earlier said that it aimed to get Rs 48,000 crore from the auction of the 1800 MHz and 900 MHz bands. It will auction 403 MHz spectrum in the 1800 MHz band and 46 MHz in the 900 MHz band. In 1800 MHz, the largest spectrum will be available for bidders in Tamil Nadu (30.2 MHz). The lucrative circles of Delhi and Mumbai will have 22.8 MHz and 25.2 MHz, respectively.

Early this month, the Cabinet approved a reserve (floor) price for 2G spectrum, 25.8 per cent lower than at the previous auction as suggested by the EGoM on telecom, at Rs 1,764.79 crore for one MHz of pan-Indian spectrum in the 1800 MHz band.

The base price for this spectrum was about 37 per cent higher in the November 2012 auction, which got only a muted response from telecom operators. The auction would be for all 22 circles in the 1800 MHz band and in Delhi, Mumbai and Kolkata in the 900 MHz band. For the latter, it approved a rate 53 per cent lower than the previous auction price.

The reserve price for one MHz in the 900 MHz band will be Rs 360 crore in Delhi, Rs 328 crore in Mumbai and Rs 125 crore in Kolkata. Licences are due for renewal in November next year in these three circles.

As in earlier auctions, successful bidders can pay the final price in instalments.

In 1800 MHz, the successful bidder will have an option to pay 33 per cent upfront; in 900 MHz, upfront payment is 25 per cent of the final amount. There would be a moratorium of two years for payment of the balance amount of one-time charge for the spectrum, to be recovered in 10 equal annual instalments.