Telecom spectrum auction starts today

India's biggest auction of telecom spectrum kicks off today with seven operators in fray for a total of 2,354.55 MHz across seven bands, towards which a reserve price of Rs 5.66 lakh crore ($85 billion) has been fixed by the government. The companies that have qualified for the auction are Bharti Airtel, Vodafone India, Reliance Jio Infocomm, Reliance Communications, Idea Cellular, Aircel and Tata Tele, who have furnished total earnest money of Rs.14,653 crore. Given that earnest money deposit is roughly 10 per cent of what a telecom operator can bid for, experts said the expectations of Rs.5.66 lakh crore ($8.5 billion) was already far-fetched. Top investment banker Goldman Sachs has predicted that total proceeds from the auction will be around $7 billion -- less than half of $16 billion that was fetched in the 2015 auction, and sharply below $85 billion if all spectrum was sold at the reserve price. 

Ahead of the auctions, Telecom Secretary J.S. Deepak has said the process would be transparent and the award of airwaves quick. "One new bidding-friendly measure we have adopted this year is that spectrum won will be assigned within 30 days from the date of upfront payment." Interest on deferred payment will be 9.3 per cent this year against 10 per cent in 2015. For the



auctions -- which will be an Internet-based, online process -- the government has hired the services of 'mjunction services'. The government said the mock auctions conducted earlier this week went off well. The auction timings are from 9 a.m. to 7.30 p.m., Monday to Saturday. The 2,300-plus MHz of airwaves on the block for telecom operators are in seven bands -- 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz and 2,500 MHz. In the previous auction 470.75 MHz was on offer, which was set to fetch the exchequer $17 billion during its tenure. 

The government has decided to allot the right to the spectrum won through auction for 20 years. The operators will have the choice of both upfront and instalments payment options. The service providers who win airwaves below 1 GHz bandwidth will have to pay 25 per cent upfront, and for those winning above that, the upfront payment will be 50 per cent. For the successful bidder, the lock-in period of equity in the company has been reduced to one year instead of the earlier stipulation of a minimum period of three years or completion of roll out obligation, whichever is later.

One new bidding-friendly measure adopted this year is that spectrum won will be assigned within 30 days from the date of upfront payment.