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Union Cabinet approved 2G telecom spectrum auction targeted to fetch 64840 crore rupees

Jan 6, 2015 09:51 IST

Second Generation (2G) telecomThe Union Cabinet on 5 January 2015 approved the largest ever auction of Second Generation (2G) telecom spectrum that is targeted to fetch around 64840 crore rupees from the sale.

The last date for submission of application for the auction is 2 February 2015 and bidders will be pre-qualified by 13 February 2015. The auction will start on 23 February 2015.

Any company holding a universal service licence to provide telephony services or eligible to obtain the services can bid in the auction.

The government had generated about 62162 crore rupees from the last auction of the 2G spectrum in February 2014.

Three Bands of 2G spectrum Auction
• The government will sell 380.75 megahertz of 2G spectrum in three bands- 800 MHz, 900 MHz and 1800 MHz.
• In 800 MHz band, 103.75 MHz in all service areas will be put on auction while 177.8 MHz in 900 MHz band will be sold in 17 telecom circles or service areas. 99.2 MHz will be auctioned in 15 circles in 1800 MHz band.
• There are total 22 telecom service areas in the country and the price of spectrum in each circle is different.
• The 900 Mhz and 1800 Mhz band are used for providing GSM based mobile services by companies like Airtel, Vodafone, Idea, Uninor. The 800 Mhz band is used for CDMA based mobile services by companies like MTS, Tata Teleservices and Reliance Communications.

Reserve price
The Cabinet approved a reserve price of 3646 crore rupees pan-India per MHz in 800 MHz band, 3980 crore rupees for 900 MHz band pan-India excluding Delhi, Mumbai, Kolkata, and Jammu & Kashmir and 2191 crore rupees pan-India (excluding Maharashtra and West Bengal) in 1800 MHz band.

The reserve or auction start price is the same as recommended by the Telecom Commission, except in the case of 900 MHz. The Telecom Commission had proposed a reserve price of 3695 crore rupees for each MHz in 900 Mhz.

Procedure of making payments

The Centre has given two options to successful bidders to make the payment:

Full Upfront Payment: Bidders can make a full upfront payment within 10 days of declaration of final price.
Deferred Payment: Bidders can make the deferred payment through an upfront payment of 33 percent in the case of 1800 MHz band and 25 percent in the case of 900 MHz and 800 MHz within 10 days of declaration of successful bidders and final price.

There will be a two-year moratorium for payment of balance amount of one-time charges for the spectrum, which  will be recovered in 10 equal annual instalments.

Auction of 3G Spectrum
Regarding the auction of 2100 MHz or 3G spectrum, Union Cabinet decided that 2100 MHz may also be put on auction simultaneously in February 2015 along with auction of other bands.

However, the reserve price for 2100 MHz was not announced. The decision to auction 3G spectrum simultaneously was taken to increase the availability of the scarce resource.

Meanwhile, Telecom Regulatory Authority of India (TRAI) has recommended a reserve price of 2720 crore rupees per mHz for 2100 MHz. However, the Telecom Commission is yet to arrive at a final price.

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