Indian government to auction spectrum worth ₹4 lakh crore in March 2021

• The Indian government has announced spectrum auction worth ₹4 lakh crore, scheduled for March 2021.
• A total of 2,251 MHz of spectrum spread over seven bands will be up for grabs.
• Reliance Jio, together with the spectrum it shares with Reliance Communications, has its license expiring in a total of 26 circles.
• Airtel and Vodafone Idea, on the other hand, have their licenses expiring in eight circles each.
• Check out the latest news and updates on Business Insider.

The Indian government today announced that it will auction spectrum worth ₹4 lakh crore in March 2021. In total, 2,251.25 MHz of spectrum spread over seven bands will be auctioned. The reserve price for this has been set at ₹3,92,332.70 crore.

The Department of Telecom (DoT) will issue a notification inviting applications for the auction this month. The auction will be open to both the incumbent telecom service providers and new companies.

"By winning the right to use spectrum through the auction, incumbent telecom service providers will be able to augment their network capacity whereas new players will be able to start their services,” the government said in its release.

These are the seven bands which will be included in the spectrum auction:

1. 700 MHz
   
2. 800 MHz
   
3. 900 MHz
   
4. 1800 MHz
   
5. 2100 MHz
   
6. 2300 MHz
   
7. 2500 MHz
   

Prices of most bands reduced

The Telecom Regulatory Authority of India (TRAI) has lowered the prices of most bands from the base prices set in the previous sale in October 2016. For example, the 800 MHz band, which is considered ideal for 4G has been pegged at ₹4,651 crore per unit, down from the earlier recommended price of ₹5,819 crore per unit, according to an ET report.

The government has set certain parameters that the bidders need to comply with, including the spectrum cap, payment terms, rollout obligations and more.

“In the auction, bidders will have to comply with parameters/conditions e.g. block size in which bidders will be able to submit their bids, spectrum cap i.e. the maximum amount of spectrum that can be held by each bidder after the completion of the auction, roll-out obligations, payment terms etc.,” the government further added.

Successful bidders will have the option to pay the entire amount upfront or they can choose to pay a specified amount upfront and the remainder in a maximum of sixteen equal annual installments after a moratorium of two years from the auction.

Additionally, the companies will also have to pay 3% of the Adjusted Gross Revenue (AGR) excluding wireline services as spectrum usage charges.

Telcos might have limited room for spectrum license renewal

Airtel’s, and Vodafone Idea’s airwaves in the 1800 MHz band in eight circles each are set to expire from July 2021 onwards, however the two telcos have backup airwaves which would allow them to offset the loss of license in case they do not renew it.

According to an ICICI Securities report dated December 8, telcos might have limited room to renew their spectrum licenses. The report states that Airtel might have to renew only ₹58,000 crore worth spectrum, while Vodafone Idea might go for only ₹19,000 crore worth spectrum.

On the other hand, the license for spectrum held by Reliance Jio, and the airwaves it shares with Reliance Communications (RCom) in the 800 MHz band expires in 26 circles in total – 12 of Jio, and 14 of RCom, in July 2021.

SEE ALSO:

Mukesh Ambani says Jio will rollout 5G services by June 2021 – and it will go beyond India

India to issue a list of ‘trusted’ telecom vendors from where Reliance Jio, Bharti Airtel, and others can procure equipment

Airtel records 3.8 million new subscribers in September – more than twice that of Reliance Jio’s additions