India's cabinet on Wednesday cleared the base price for the country's largest spectrum auction to date, expected to fetch around $85 billion at the approved reserve price, address the menace of mobile phone call drops and give a push to 4G data communications.
The approval was given at a meeting of the cabinet chaired by Prime Minister Narendra Modi. But a decision on spectrum usage charges, which has evoked strong opinions from stakeholders, has been deferred and the matter referred again to the telecom watchdog.
"This will be the largest auction to date," union Finance Minister Arun Jaitley said in a press briefing later. He said since the recommendations on spectrum usage charges from the Attorney General's office and the Telecom Commission came later, it was felt that the matter be referred to the watchdog once again.
There was no word on when specifically the auction will be conducted.
"The appetite for India's telecom sector is very big," Communications and IT Minister Ravi Shankar Prasad, who also briefed the media, said when asked if such a large auction will evoke the kind of interest which the government is hoping for.
More than 2,300 MHz of airwaves will be on the block for telecom operators in seven bands -- 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz and 2,500 MHz. Based on their pan-India reserve price, the mop-up can be as much as $83 billion against $17-billion the last time.
The previous round had seen 470.75 MHz on the block.
Officials said norms for the latest round of auctions will allow operators to buy spectrum at par with international holding values and end the spectrum shortage. The availability of such a large quantity of spectrum will give a fillip for Digital India, they added.
It is learnt from official sources that the reserve prices of various bands, as approved by the cabinet, remain the same as that recommended by the Telecom Regulatory Authority of India.
The telecom watchdog had recommended a pan-India reserve price of Rs 2,873 crore for 1,800 MHz, Rs 3,341 crore for 900 MHz, Rs 5,819 crore for 800 MHz, Rs 3,746 crore for 2,100 MHz, Rs 11,485 crore for 700 MHz, and Rs 817 crore each for 2,300 MHz and 2,500 MHz bands.
As regards spectrum usage charge, the recommendation of the regulator was 1 per cent of revenues for 2,500 MHz and 3 per cent for all the other bands.
"We are thankful to the government for making available the huge quantum of spectrum. This is the first time so much of new bands are going for auctions. Earlier, it was mostly renewal," Rajan S. Mathews, Director General, Cellular Operators' Association of India, told IANS.
"The industry now holds 2,772 MHz of spectrum and with this auction the government will make more spectrum across all bands," Mathews added.
The issue is regarding pricing of 700 MHz, Mathews said, adding that from the price point of view it is unaffordable to almost all the players.
"We don't see much appetite for that band. Bidding in 1,800 MHz, 2,100 MHz, 2,300 MHz will be exciting, but for 2,500 MHz it will be not so exciting. As both 800 and 900 MHz are non-contiguous in nature, hence it is as it is not very exciting."
In the previous round of auctions, conducted in March, as much as Rs 109,874 crore worth of bids were received from the 115 rounds spread over 19 days. In all 470.75 MHz was put to auction against 390 MHz in November 2012 and 426 MHz in February 2014.