Auction for Telcom spectrum worth Rs 96,000 Cr to start from May 20

The Department of Telecommunications (DoT) has announced its plans to auction eight radio frequencies totaling 10,523.15 MHz for mobile services. The base price for this auction is set at Rs 96,317.65 crore. This includes spectrum left unsold from the previous 2022 auction and radio wave rights set for renewal in 2024, including those held by companies undergoing insolvency processes.

The last telecom spectrum auction occurred in 2022, generating record proceeds of Rs 1,50,173 crore for the government. This upcoming auction will be the second since the telecom reforms implemented in September 2021.

Here's a breakdown of key details regarding the upcoming spectrum auction:

The auction process will commence on May 20.

Various spectrum bands, including 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz, 3300 MHz, and 26 GHz, will be available.

Spectrum allocation will be for a duration of 20 years.

The deadline for application submissions is April 22.

DoT will release the final list of bidders on May 9.

Successful bidders will have the option to make payments in 20 equal annual installments, with a net present value (NPV) protection at an interest rate of 8.65 percent.

Spectrum usage charges (SUC) will not apply to the acquired spectrum.

There have been minimal changes in reserve prices for other spectrum bands, and regulations regarding spectrum sharing, trading, and leasing remain unchanged.

Telecom service providers will have the option to surrender spectrum after ten years from the effective date of purchase.

Analysts anticipate a neutral impact of the upcoming auction on the telecom industry. ICICI Direct highlighted that the auction's outcome is expected to be limited to renewals, as operators already possess adequate spectrum for offering 4G and 5G services. The brokerage also noted that while there were no surprises in terms of regulations, there were notable increases in reserve prices for certain bands.

The increase in reserve prices was observed across various bands, including 800MHz, 900MHz, 1800MHz, 2100MHz, 3300MHz, and 26GHz. However, reserve prices for the 2,300MHz and 2,500MHz bands remained unchanged.

Union Minister Ashwini Vaishnaw welcomed the Cabinet's decision on the spectrum auction, stating that it would provide telecom service providers with a transparent opportunity to acquire spectrum regularly.