Spectrum auction expected in Feb

Govt aims to collect Rs 9,355 cr from the telecom spectrum auctions for FY15

The government aims to start the next round of spectrum auction on February 3, according to a recent communication of the Department of Telecommunications (DoT). DoT is to issue notice inviting applications on December 1. The last date for applications is January 12, 2015, while applicants will be able to withdraw their applications till January 27.

According to the Budget estimate for 2014-15, DoT has projected revenue receipts from the upcoming auction, which will include the sale of airwaves in the 800-MHz, 900-MHz and 1800-MHz bands, at Rs 9,355 crore. It has also told the ministry of finance that the auction of 3G spectrum (2,100 MHz band), which might be conducted this fiscal year if the defence department releases 3G radiowave, will add Rs 5,000 more to the government exchequer as revenue receipts from the auction.

As companies pay about a third of the total bid value, the government is looking at a total bid value of Rs 28,065 crore from the next round of auction. The projected figure is far too conservative, considering the successful auction that generated a total bid value of Rs 61,162.22 crore in February by selling 46 MHz of airwave in the 900 MHz band and about 307 MHz spectrum in the 1,800 MHz band.

In the coming auction, according to DoT data, the government is likely to offer 184 MHz of radiowave in the 900 MHz band across 18 telecom zones and 104 MHz spectrum across 17 circles in the 1800 MHz band which includes airwaves which could not be sold in the last auction.

However, the next auction will not have any 900 Mhz band spectrum for sale in high-priced circles like Delhi, Mumbai and Kolkata.

Besides, all available spectrum in the 800 MHz band, primarily used by CDMA operators, across all 22 circles will be put up for auction.

In the last auction, the government has received Rs 18,296.32 crore for the fiscal year ended March 2014, which is about 61 per cent higher than the Budget target of Rs 11,343 crore.

Cellular operators, who will have to renew their licences, together hold about 172 MHz in the 900 MHz band and about 26 MHz in the 1800 MHz band.

Besides the fact that the incumbent operators need to renew licences, telecom operators have been constantly looking to increase their spectrum holding in each circle to boost their potentially remunerative high-speed data services.

While companies like Bharti Airtel and Idea Cellular would try to retain back spectrum in the circles where their licences are expiring in the 900 MHz band, they are likely to pick up spectrum in the 1800 MHz band in all those circles. All the incumbent players have done the same thing in the previous auction that was conducted in February.

The DoT has already asked the Telecom Regulatory Authority of India or Trai for its recommendations on valuation and pricing of spectrum in all the circles where it would have to conduct auction. There are about 29 licences that would expire across 18 circles in 2015-16.