DoT sets stage for spectrum auctions this year; MSTC selected as auctioneer

The Department of Telecommunications (DoT) has begun preparing the draft Cabinet note for conducting spectrum auctions later this year. This comes even as operators are struggling with the implications of the adjusted gross revenue (AGR) verdict.

Given the high possibility of operators shying away from participation, the DoT is yet to decide on including the premium 5G spectrum in the tender.

Minor changes regarding the quantum of spectrum are expected, by way of addition of some airwaves, which had earlier remained unsold. The remaining recommendations are in line with suggestions made by the Telecom Regulatory Authority of India (Trai). MSTC — selected as the auctioneer — is expected to bring out the notice inviting applications, or the NIA document, by the end of next month.

This is for the first time that MSTC has been selected for handling spectrum auction. The public sector enterprise executed coal auctions in early 2015, which were held after the Supreme Court cancelled allocation of coal mines in September 2014. It is also holding auctions for various central and state government departments.

A person privy to the development said the draft note was being prepared even though the Centre was yet to decide on including the coveted 5G spectrum. The draft note will be sent to other ministries for comments.

Government calculations have pegged Vodafone Idea’s AGR liabilities at over Rs 53,000 crore, and that of Bharti Airtel at Rs 35,500 crore. Both companies have made part payments towards these liabilities.

The two have, time and again, expressed their reservations over the auctions given the financial stress in the sector, besides the pricing of the proposed 5G auction. Jio was the sole player that had expressed willingness to participate in the tender process. However, it had also said the price of 5G spectrum bands were too high.

In August 2018, Trai had recommended the sale of 8,093 MHz of radiowaves, used for telecom services on 5G and other bands, to be auctioned at a starting price of over Rs 5.7 trillion.

It said the 3,300-3,600 MHz band — expected to be the primary band for 5G services — should be auctioned as a single band and in blocks of 20 MHz each, at Rs 492 crore per MHz.

Old telecom operators had dubbed the rate exorbitant, arguing that the average price of 5G bands auctioned in South Korea, Spain, the UK, and Italy worked out to Rs 84 crore/MHz.