Saturday, December 14, 2013

Govt invites applications for mobile spectrum sale

Government has initiated the process for sale of spectrum on January 23 and issued the notice inviting application (NIA), fixing January 4 as the last date of submission of applications. 

The spectrum sale, in the 900 MHz and 1,800 MHz bands, is crucial for the cash-strapped government which expects revenues of over Rs 48,000 crore from the process which will see bids from top operators like Airtel, Vodafone and Idea whose licences start expiring from next year. 
While the government will auction around 403 MHz spectrum in the 1,800 MHz band across the country, the more-efficient and lucrative 900 MHz band will see sale of about 46 MHz spectrum spread across Delhi, Mumbai and Kolkata. 

"The award of spectrum in 1800MHz and 900MHz band shall be conducted as a single process. A common notice has been issued only for the sake of convenience," the NIA, issued late last night, said. 

The Cabinet had gone in for a lower reserve price for the latest round of auctions after the last two processes -- in November 2012 and March this year -- met with a lukewarm response. Prices have been cut by 25-53% and the government expects that there will be healthy participation in this round. 

DoT will hold a pre-bid conference on December 20 and the last date for companies to seek clarifications on rules has been fixed as December 28, the notice said. 

The government has provisioned garnering Rs 40,874.5 crore from spectrum revenue in the budget. This includes upfront money from the auction and various fees levied on airwaves used for commercial mobile communications. 

The successful bidder will have option to pay final price of spectrum in instalments. In the 1800 Mhz band, the successful bidder will have an option to pay 33% upfront, while for airwaves in 900 Mhz band, upfront payment is 25%. 

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

Successful bidder will have to pay the first instalment of the balance amount on the third anniversary of the first payment and subsequent instalment will have to be on the same date of each following year. 

For the first time in spectrum auction, the NIA mentions allowing spectrum-sharing, mergers and acquisitions and spectrum trading, for which detailed guidelines will be announced later. On spectrum-sharing, NIA said companies who buy spectrum through the auction will be able to share airwaves for providing mobile phone services. 

In case all spectrum gets sold and companies opt for deferred payment mode, then government will be able to get about Rs 15,200 crore this fiscal from direct sale of airwaves. 

New companies will have to bid for minimum of 25 blocks of airwaves, each of 200 Kilohertz frequencies, amounting to 5Mhz in 1800 Mhz band. Existing players will be required to bid a minimum of three blocks of airwaves in this band. 

All bidders interested in buying 900 Mhz band—which gives double coverage compared with signals transmitted in 1800 Mhz band—will have to buy minimum of 5 Mhz of airwaves. 

A company (in both band categories) can hold upto 25% of spectrum assigned to all companies in a service area and up to 50% of airwaves (allotted to all companies) in a particular band assigned in a service area, the NIA said.

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