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Mega Spectrum Auction Starts, Target 5.6 Lakh Crores. 10 Things At Stake
This is the biggest-ever spectrum auction Mobile airwaves worth Rs 5.6 lakh crore up (at base price) up for sale The premium 700 MHz band has been put on the block for first time
01 Oct 2016, 11:20 AM IST 
Telecom operators have deposited Rs 14,653 crore as earnest money for the auction.
- All eyes are on the premium 700 MHz band, which is being put on block for the first time. But its steep pricing could be a dampener. A company interested in buying spectrum in the 700 MHz band will need to shell out a minimum of Rs 57,425 crore for a block of 5 MHz on a pan-India basis.
- All together, a total of 2,354.55 megahertz of mobile airwaves frequencies are up for auction for the 700 Mhz, 800 Mhz, 900 Mhz, 1800 Mhz, 2100 Mhz and 2300 Mhz bands. All the airwaves being auctioned can be used for high speed 4G services.
- Seven operators are in the fray - Reliance Jio, Bharti Airtel, Vodafone, Idea Cellular, Tata Teleservices, Reliance Communications and Aircel. Reliance Communications and Aircel, which recently announced a merger, will bid separately in the upcoming mega-spectrum auction.
- These telecom operators have deposited Rs 14,653 crore as earnest money for the auction, with Reliance Jio alone submitting the highest amount of Rs 6,500 crore. Earnest Money Deposit (EMD) is indicative of a company's strategy to bid in specific circles and spectrum bands. Telecom companies have to deposit about 12 per cent of the reserve price of the spectrum they are likely to bid for.
- Going by the earnest money deposits, analysts don't expect aggressive bidding from operators. Care Ratings expects a muted response from operators at the auction as they will look at alternatives like sharing of airwaves. Many telecom operators are also reeling under high debts, which may prevent them to bid aggressively.
- But Vodafone's cash injection of nearly Rs 47,000 crore into its Indian unit ahead of the spectrum action and Reliance Jio's entry have raised some optimism about the response to the auction.
- To battle Jio, analysts and industry players say, nationwide premium 4G services are a must. Both Vodafone and Idea Cellular - the No. 2 and No. 3 operators in India - have 4G services in just about half of 22 telecom circles.
- The success of the spectrum auction is crucial to bridging the government's Budget deficit. Finance Minister Arun Jaitley expects a revenue of Rs 98,994 crore from communication services that includes proceeds from spectrum auction and other fees.
- Telecom companies winning spectrum have to pay 25-50 per cent of the bid money upfront, depending on the type of spectrum. The balance has to be paid in 10 years after a two-year moratorium.
- The auction conducted in 2010 for 3G airwaves in the 2100 Mhz band has been the longest that lasted for 34 days.(With Agency Inputs)
