Telecom spectrum auctions begin today: Here’s all you need to know

India’s telecom spectrum auction kicks off today on March 1 for the fourth-generation (4G) mobile networks for the first time in four years. The Union Cabinet on 16 December approved the auction of the 2,251 megahertz airwaves by the end of the financial year 2020-21 at the reserved price of Rs 3.92 lakh crore.

As per the directives, the Department of Telecommunications will offer spectrums across seven bands – 700MHz, 800MHz, 900MHz, 1,800MHz, 2,100MHz, 2,300MHz and 2,500MHz. The three big telcos, Reliance Jio, Airtel and Vodafone-Idea (Vi) will participate in the auction. The validity of the spectrum bought will be for 20 years.

Reliance Jio the highest bidder

Reliance Jio has come out as the highest bidder in the auction with the Earnest Money Deposit amount of Rs 10,000 crore earning the highest eligibility points. Bharti Airtel is the second bidder in line with a bid of Rs 3,000 crore while Vodafone-Idea has bid Rs 475 crore.

For the 1,800, 2,100, 2,300, and 2,500MHz bands, the telcos have the option of paying 50 percent of the final bid upfront while the remaining amount can be paid within a period of 2 years over 16 equal instalments and an interest of 7.3 percent, following 2 years moratorium. For the remaining 700, 800 and 900MHz bands, telcos can pay 25 percent of the successful bid amount.

The parameters to follow

The final bidders have also been directed to pay 3 percent of the Adjusted Gross Revenue, excluding wireline services as the spectrum usage charges for the respective spectrum that the telecom companies have won.

The bidders will also have to follow certain parameters including block size in which the bidders have to submit their bids, the maximum limit of the spectrum that is allowed to be in the possession of each bidder after the auction is complete, payment terms, rollout obligations and more.

The DoT also allows telecom providers to share the spectrum in particular bands that have been acquired during the auction after one year from the date of ‘Frequency Assignment’.

No 5G auction

It has been specified that the auction will not have the fifth-generation (5G) spectrum for auction. The telcos have shown their reservations over the steep pricing of the spectrum.

As per a PTI report, it is expected that Bharti Airtel and Reliance Jio are looking to renew their expiring spectrum and are likely to bid for the same in these auctions. They may also bid to get the spectrum in the sub-1GHz band which can be used for low-band 5G.

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