Spectrum auction to kick off on Sept 29

For spectrum below 1 GHz, bidders will have to pay 25% of the amount upfront; spectrum to be assigned in 30 days

The government will kick off the biggest ever spectrum auction on September 29 and plans to assign spectrum won in the auction within 30 calendar days from the date of making the payment, which takes 10 days.

JS Deepak, secretary of the Department of Telecommunications, said the focus was on facilitating the ease of doing business. In earlier auctions, spectrum assignment took as much as four-five months.

The government is making available 2354.55 MHz of spectrum in the auctions and at base price it would garner Rs 5.56 lakh crore, which includes the additional Rs 27,000 crore of harmonised spectrum. The government is putting up large chunks of spectrum for the first time, which should help remove fragmentation and improve quality of services.

A single auction will be conducted in simultaneous multiple-round ascending (SMRA) format for seven bands — 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz. The DoT also released the Notice Inviting Applications (NIA) for the auction on Monday on its website.

Deepak said: “The auctions are on track and will be held in September. The pre-bid conference, proposed to be held on August 13, wherein various elements of the NIA will be discussed and the inter-ministerial committee to supervise the auction will interact with bidders, seek their comments and provide clarifications.”

Over the past six months, the DoT has worked closely with industry and defence to harmonise spectrum so that waste is eliminated. Thanks to this process, 197 MHz of additional spectrum in 1800 MHz band and 37.5 MHz in 800 MHz band have been released. “Harmonisation has been the demand of the industry for a long time and we have been able to harmonise spectrum in the 1800 Mhz and 800 Mhz bands, which will put an additional 234.5 Mhz at the reserve price valued at Rs 27,000 crore, Deepak said.

The amount of spectrum being put up for auction is more than before, said Deepak, which will enable bidders to provide good quality of service in accordance with international benchmarks and spectrum fragmentation, which has dogged the sector will be a thing of the past.

Other key elements of the auctions are the spectrum usage charge (SUC), which has been set at 3 per cent for new spectrum. This is lower than the prescribed 5 per cent in 2015. Overall, the weighted average formula for all spectrum including 2300 and 2500 Mhz with a floor for the revenue being paid this year as well as 3 per cent floor of SUC was approved by the Cabinet last week.

Bidders will have to pay 25 per cent of the amount upfront, for spectrum above the 1 Ghz band, they will have to pay 50 per cent upfront. The instalments would be the same as in previous auctions, with the second instalment becoming due three years after the initial payment.

Other changes are that for those whose networth is taken into account as part of the eligibility, the lock-in period will now be one year, instead of two years beyond the roll-out obligation earlier.