India to start largest telecom spectrum auction next month
Photo Credit: Shah Junaid/VCCircle

Bidding rounds for the country's biggest-ever spectrum auction will begin from September 29, in which mobile airwaves worth Rs 5.63 lakh crore at the base price value will be put up for sale.

"Large chunk of spectrum is being put for auction which address issue of fragmentation, improve quality of service and rules have been made bidder friendly," Telecom Secretary J S Deepak said while releasing Notice Inviting Application (NIA).

The government will put a total of 2,354.55 megahertz of mobile airwaves frequencies for auction all band -- 700 Mhz, 800 Mhz, 900 Mhz, 1800 Mhz, 2100 Mhz and 2300 Mhz. All the airwaves being put for auction can be used for high speed 4G services.

The total quantum of spectrum being put for auction includes about 197 Mhz of frequencies in 1800 Mhz band and 37.5 Mhz in 800 Mhz band (CDMA band).

The government expects to raise at least Rs 64,000 crore from the auction of about 2,354.55 Mhz of spectrum and Rs 98,995 crore from various levies and services in the telecom sector this financial year.

The government for the first time has promised to assign spectrum within 30 days of making upfront payment by successful bidders.

Telecom companies winning spectrum in 700, 800 and 900 Mhz band will have to pay at least 25 per cent of the bid amount initially within 10 days the auction ends. Rest of the payment will have to be paid in 10 annual instalments after two years of moratorium.

For rest of the bands, at least 50 per cent of payment will have to made.

The government has also reduced interest on instalments to 9.3 per cent from about 10 per cent earlier.

"With auction size of this magnitude and bidder friendly rule there is going to be immense interest from bidders. The amount of spectrum being put to auction is more than any previous auction. It will give them opportunity to bid and acquire chunk of spectrum which would enable to them to provide international quality services," Deepak said.

This is the first time airwaves in 700 Mhz band will be put up for auction. The airwaves in this band are considered premium among all, as cost of providing service in it is one-third cost of 3G service in 2100 Mhz band.

The 700 Mhz band alone has potential to fetch bids worth Rs 4 lakh crore if all spectrum in it gets sold at the base price.

The Department of Telecom will hold pre-bid conference on clarification over NIA on August 13.

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