According official sources, the auction is expected to generate much more revenue to the government exchequer than it had got in 2015. The Centre had generated a total of Rs 109,874 crore ($16 billion) revenue in 2015, while in this, the governments expecting to fetch about Rs 5.6 lakh crore from the sale of spectrum in seven frequencies.
The auction will help operators augment expansion of high-speed 4G voice and data services in the world’s second largest mobile phone market by users after China.
“This may be the largest ever auction in history of the country. It has been approved,” said Finance Minister Arun Jaitley while briefing media persons about the Cabinet decisions. He, however, did not give timelines for the auction, but official sources said that the auction is likely to take place in September.
“Given that the government has decided to refer back the issue of spectrum usage charge (SUC) paid by operators to Telecom Regulatory Authority of India (TRAI), we are hopeful that the telecom regulator would submit its report in a month.
As soon as the report would come to us, the government would start the auction procedures instantly after taking needed approvals,” a source said, adding that spectrum will be sold in the following bands: 700 Mhz, 800 Mhz, 900 Mhz, 1800 Mhz, 2100 Mhz, 2300 Mhz and 2500 MHz.
The TRAI had proposed a 3 per cent of annual revenue of operators as SUC, a recommendation that inter-ministerial panel Telecom Commission also backed.
However, the government’s chief law officer Mukul Rohatgi opined against hiking SUC for broadband wireless access (BWA) providers such as Mukesh Ambani’s Reliance Jio Infocomm from the current 1 per cent.
Jaitley said opinion of TRAI will be taken again as AG opinion came later. In the upcoming auction, more than 2,300 MHz of airwaves will be on the block for telecom operators in seven bands. Of the Rs 5.66 lakh crore expected from the auction, the government would get Rs 64,000 crore this fiscal as part of staggered payment schedule. Another Rs 98,995 crore would come from various levies and services in the telecom sector.
The government had got Rs 1.1 lakh crore from sale of spectrum in March 2015. Lock-in period for trading in spectrum won under the auction has been reduced to 1 year from 3 years at present, a move that will encourage consolidation in the telecom industry.
The Trai had recommended a pan-India reserve price of Rs 2,873 crore for spectrum in 1,800 MHz band; 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.
“The appetite for India’s telecom sector is very big,” Communications and IT Minister Ravi Shankar Prasad said when asked if such a large auction will evoke the kind of interest which the government is hoping for.
Trai has recommended SUC at a uniform rate of 3 per cent across the industry and gradually bringing it to 1 per cent.
The premium 700 Mhz band is to be auctioned at a reserve or base price of Rs 11,485 crore per Mhz. The cost of delivering mobile services in this band is estimated to be around 70 per cent lower than 2100 Mhz band, used for providing 3G services.