The largest Telecom Spectrum Auction will start from September 29. A significant block of spectrum is available for sale, and it aims to prevent fragmentation, improve the quality of services and also make the rules more bidders friendly.
The range based on the base price is valued at a staggering Rs. 5.66 trillion. The independent telecom regulatory body, TRAI has been asked to make new recommendations on the spectrum usage charges. The auction will be for frequency bands of 2500 MHz, 2300 MHz, 2100MHz, 1800MHz, 900MHz, 800MHz, and 700MHz. It is for the first time the costly but extremely efficient 700 megahertz band is also up for sale.
The receipts of the auction will significantly boost the central government’s coffers and at the same time broaden the bandwidth availability and to take care of the problems of call drops.
The framework of the auction was designed by TRAI and reviewed by DoT before they were placed before the Union Cabinet for approval. Finance Minister Arun Jaitley termed it the biggest spectrum auction in the history of telecommunication. He added that more consultation is needed on the issue of spectrum usage charges, and the TRAI has been asked to make recommendations.
For better operability, it is important to have a pan-India presence, and it has in the past led to forceful bidding. Last year the government had auctioned a total of 380.75MHz of spectrum for sale in the range between 800 MHz to 2100 MHz and had raked in Rs.1.1 trillion.
In the present deal, the 700 MHz is the most expensive band with a base price of Rs. 11,485 crores for each Megahertz. The industry has been asked to pay Rs. 57,425 crores for 5MHz on a pan-India basis. Skeptics have raised doubts about the participation of the sector in the auction especially for the 700MHz band which has been priced ambitiously. The telecom companies have sizeable debts on their backs, and this makes affordability a big question. The particular band itself can rake in Rs.4 trillion if it goes the government way.
Operators are however optimistic, and the good news is that more spectrum is available than required in the immediate future and the supply side is comfortable. Still, the prices set by the government are too ambitious and artificial. Operators are much interested in the 1,800MHz, 2,100 MHz, and 2,300 MHz range, but the chances of participation in the 700 MHz band is very bleak. The industry is burdened with considerable debt, and the possibilities of the sale of untested bands like 2500MHz are also little. However, the entry of a formidable player like Reliance Jio is likely to change the scenario and makes the sector more competitive. It is the consumer who is the biggest winner in the end.
The industry is burdened with considerable debt, and the possibilities of the sale of untested bands like 2500MHz are also little. However, the entry of a formidable player like Reliance Jio is likely to change the scenario and makes the sector more competitive. It is the consumer who is the biggest winner in the end.