Telecom auctions start today; 700 MHz premium may go unsold yet again

The premium band is considered ideal for internal coverage but went unsold in the 2016 auctions. TRAI in its recommendations in August 2018 reduced the price by 40%

The telecom spectrum auctions that began on Monday, after a hiatus of nearly five years, may once again witness the premium 700 MHz band getting unsold.
 

It is learnt that the 700 MHz spectrum, the base price for which was revised downward by the Telecom Regulatory AUthority of India (TRAI), may not find any takers.
 

"The earnest money deposited by the three telecom companies is an indicator that none of them would be interested in buying the 700 MHz band," an official in the know said.
 

The premium band is considered ideal for internal coverage but went unsold in the 2016 auctions. TRAI in its recommendations in August 2018 reduced the price of the coveted airwaves by 40 per cent.
 

Experts also believe that the reduced price is not enticing enough for the companies. The telecom players in the past have claimed that the base price of the 700 MHz spectrum is higher than the price in countries including US, UK, Australia and Japan.
 

The auction that began on Monday will see Bharti Airtel, Reliance Jio and Vodafone Idea competing with each other to bag Rs 3.92 trillion worth of airwaves.
 

On December 16, the Union government approved a 4G auction that is expected to fetch the exchequer Rs 3.92 trillion by offering 2251 megahertz of airwaves. The coveted 5G spectrum has been kept out of the offer.
 

The last spectrum auctions were held in October 2016 and the government earned Rs 65,789 crore from those auctions.
 

The bands that have been put on offer are – 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz.
 

The Digital Communications Commission, the apex decision making body of the Department of Telecommunications, in May, approved the spectrum auction plan subject to the cabinet approval.
 

MSTC is the auctionnaire for the airwave sale. 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.
 

TRAI in August 2018, came out with its recommendations on spectrum pricing, wherein the regulator reduced the base price of frequencies that went unsold in the 2016 auction.
 

The reserve price for the premium 700 MHz spectrum was reduced to Rs 6,568 crore per MHz all-India from Rs 11,485 crore in 2016.
 

Trai recommended a base price of Rs 4,651 crore for paired spectrum in the 800 MHz band covering 19 circles, Rs 1,622 crore per MHz for the 900 MHz band covering seven circles, Rs 3,399 crore per MHz in the 2,100 MHz band covering 21 circles, and Rs 821 crore per MHz in the 2,500 MHz band covering 12 circles. It also suggested Rs 960 crore per MHz for unpaired spectrum in the 2,300 MHz band on a pan-Indian basis