The auction of airwaves in the 900 MHz and 1800 MHz slated for February 3 looks set to go through. Department of telecommunications secretary MH Farooqui said eight companies have applied for the right to bid in the auctions from which the government hopes to realise at least Rs 11,300 crore.
The eight include Bharti Airtel, Vodafone and surprise entrant Reliance Jio Infocomm. Farooqui said, “From the sale of spectrum in the current year, Budget FY14 has provided for Rs 11,343 crore. We will exceed that.”
Internal estimates by the government has budgeted for a target of Rs 40,000 crore for this fiscal from the auctions, the one-time spectrum charges and the annual licence fees.
The companies have applied despite the confusion about the uneven spectrum usage charges that an inter-ministerial panel is examining. Wednesday was the last date for submitting the applications. Companies can withdraw them by January 27.
The enthusiasm among the firms is quite different from the response to the last round of auctions held a year ago in March 2013 when none of the GSM operators, including Bharti and Vodafone, had bid, citing high reserve or base price. The competition is expected to be tough as Reliance Jio has applied for both 900 and 1800 MHz and has deep pockets to bid aggressively.
The companies missing from the action include Loop from the Essar Group, Videocon and Sistema Shyam.
After two rounds of failed auctions due to the high reserve prices the government had gone back to the telecom regulator – Trai in October last year for setting a new price with terms and conditions. Based on the Trai recommendations the Cabinet has fixed the base price for the 1800 MHz band for pan-Indian licence at Rs 1,765 crore per MHz, about 26 per cent lower than that in March 2013. Similarly for the 900 MHz it has approved a rate up to 53 per cent lower than the previous auction price. For Delhi it is Rs 360 crore a MHz, Rs 328 crore for Mumbai and Rs 125 crore for Kolkata. The 900 MHz band is the most sought after by telecom operators as it has the best propagation characteristics. While adjacent 800 MHz too is good, except for Sistema, no other domestic telecom company uses this band. The current auction will not cover this band parts of which have been set aside to accommodate the spill over of transmission from the 900 MHz band by the companies.
Licences of Bharti and Vodafone for the 900 Mhz spectrum in the three metros are coming up for renewal in November this year. About 403 MHz of 2G spectrum in the 1800 MHz band and about 45 in the premium 900 MHz band is being put up for auction.
Auction of the 1800 band is a result of the Supreme Court order that the government sell all spectrum freed from the cancellation of 122 licences as a result of its judgment on February 2, 2012, in the 2G spectrum allocation case.
Those which have applied other than Vodafone, Bharti and Reliance Jio are Aircel, Tata Teleservices, Idea Cellular, Telewings and Reliance Communications.
While Loop Mobile MD and CEO Sandip Basu told PTI that the company has filed an application before telecom tribunal TDSAT for extension of licence and it expects “a positive outcome”, Sistema has filed a reply to the Trai consultation paper demanding that 800 MHz band prices, too, be clipped. Public sector BSNL and MTNL have also not applied for the bidding.
The bidding rules say that companies participating in auction for 900 MHz band will have to bid for a minimum of 5 MHz while for 1800 MHz, a new company will have to bid a minimum of 5 MHz and existing ones will have to bid for only three as this band is considered more efficient and hence needs less space than 900 MHz for running a service. A Reuters report said Norwegian firm Telenor has confirmed its interest for bidding in the auction.