04:51 am - Thursday 27 April 2017

All eight telecom operators to take part in upcoming spectrum auction

By insightVAS - Wed Jan 29, 4:54 pm

The government’s decision on spectrum usage fee seems to have found a favour with telecom operators as none of them has withdrawn their application from spectrum auction on the last day.

Bharti Airtel, Vodafone, Reliance Jio Infocomm, Idea Cellular, Telewings (Uninor) , Reliance Communications, Tata Teleservices and Aircel are competing among them for about 403 Mhz of airwaves in 1800 MHz band and 46 MHz spectrum in 900 MHz band.

The Empowered Group of Ministers on telecom, headed by Finance Minister P Chidambaram, decided to levy annual spectrum usage charge (SUC) on new airwaves for mobile services at 5 percent of their adjusted gross revenue earned from telecom services. The present rate is in the range of 3-8 per cent.

On EGoM’s decision, GSM industry body COAI said that it does not address the anomaly of differential spectrum usage charge and will lead to different rates being applied to telecom operators for holding similar spectrum.

“In turn, it will affect the potential investments to the sector, which is already facing hurdles presently. In addition, opportunities for arbitrage that exist between different bands and technologies would continue to exist,” COAI Director General Rajan S Mathews said.

Airtel has approached Department of Telecommunications to reduce bank guarantee from Rs 3,700 crore to about Rs 2,900 crore as it had submitted for the upcoming auction. A new player needs to submit a minimum bank guarantee of Rs 1,918.75 crore if it plans to bid for pan-India spectrum in the 1800 MHz band. For the scarce 900 MHz band, companies are required to deposit Rs 438.75 crore as minimum earnest money if they want to bid in all three metros – Delhi, Mumbai and Kolkata.

Government expects a minimum of Rs 11,300 crore in upfront payment from the upcoming auction of airwaves worth Rs 48,685 crore at the base price. Successful bidders can pay the remaining amount over a maximum of 10 yearly instalments. In November 2012, bids worth Rs 9,407 crore were received for spectrum worth Rs 28,000 that was offered.

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