Spectrum auction begins, government aims to raise up to Rs 10,000 Crore

The central government said that the total quantum of the spectrum being auctioned is 10,522.35 MHz in various bands valuing Rs 96,238.45 Crores at reserve prices.

After two postponements, auctions for spectrum to telecom service providers begin today. The Ministry of Communication said in an official release that the auction for spectrum began at 10 am on June 25, 2024. The invitation for the spectrum auction was initiated on March 8 this year, but the date of the auction was postponed two times. Initially, May 20 was set as the auction date.

The Department of Telecommunications (DoT) will auction frequencies in the bands of 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz, 2,500 MHz, 3,300 MHz, and 26 GHz. However, premium 5G airwaves in the 700 MHz band were not auctioned this time around as supplies have run out. Spectrum bought in this auction will be valid for 20 years. After 10 years telecom companies can share, trade, lease, and surrender the spectrum.

Telecom companies will have the option to pay the full amount upfront or in EMIs with interest. The interest rate for deferred payments in this auction is 8.65 per cent, higher than the 7.2 per cent rate in the 2022 auction. Payment options include part payments with corresponding moratoriums or payments in 20 yearly instalments, with the first instalment 10 days post the auction. Telecom companies can also Pre-pay without penalty.

In this round of spectrum auction, the Department of Telecom (DoT) has excluded the 600 MHz and 700 MHz bands. The department also increased reserve prices by 12 percent and 8.9 percent for the 3,300 MHz and 26 GHz bands, respectively. The spectrum prices were also increased by 11-14 percent in bands or circles that saw demand in the 2022 auctions. Reliance Jio, Bharti Airtel, and Vodafone Idea have deposited earnest money of a total of Rs 4,350 crore.

Reliance Jio has deposited Rs 3,000 crore, Bharti Airtel Rs 1,050 crore, and Vodafone Idea Rs 300 crore. Telecom companies have the option to bid up to three to four times of the amount deposited as earnest money. The Department of Telecommunications has allocated eligibility points to Airtel at 7,613, to Vodafone Idea at 2,200 points, and to Reliance Jio at 21,363 points.

Companies whose licenses and spectrum are expiring in the calendar 2024, and who don't hold any spectrum, bought through previous auctions in a particular circle or band, will be treated as "new entrants" in the sale. Under the spectrum auction rules, the DoT has pegged the net worth eligibility for bidders at Rs 100 crore per LSA, with Jammu & Kashmir and Northeast circles being exceptions where the net worth requirement is lower at Rs 50 crore.

Airtel needs to renew its airwaves in J&K, Odisha, Bihar, UP (East), West Bengal and Assam. Vodafone Idea needs to renew its spectrum in West Bengal and UP West circles. (ANI)

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