FM Arun Jaitley says mega-spectrum auction plan approved: 5 key facts

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Updated: June 22, 2016 4:04:55 PM

The total potential revenue of Rs 5.66 lakh crore from the spectrum sale is more than double of telecom services industry gross revenue of Rs 2.54 lakh crore reported in 2014-15.

arun jaitley-l-reutFor spectrum below 1 Ghz band such as 700 Mhz, 800 Mhz, 900 Mhz, companies will require to pay 25 per cent upfront and rest in ten years after a 2-year moratorium. It is in line with practice of earlier auctions but differs from Trai suggestion. (Reuters)

Finance Minister Arun Jaitley today announced that the Cabinet has approved a mega-spectrum auction plan which is estimated to fetch about Rs 5.66 lakh crore to the exchequer.

The total potential revenue of Rs 5.66 lakh crore from the spectrum sale is more than double of telecom services industry gross revenue of Rs 2.54 lakh crore reported in 2014-15. Modi government hopes that the availability of such a large quantity of spectrum will give a fillip for Digital India.

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1) More than 2300 MHz spectrum has been made available for auction across 7 bands. The 7 bands are: 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz.

2) Government expects to raise at least Rs 64,000 crore from the auction of about 2300 Mhz of spectrum and Rs 98,995 crore from various levies and services in the telecom sector.

3) The main document of auction, notice inviting application, is likely to be issued by July 1, followed by pre-bid conference on July 6. The bidding is expected from September 1.

4) As per the rules approved by an inter-ministerial panel, the auction would include sale of most premium 700 Mhz band at a reserve price of Rs 11,485 crore per Mhz. The cost of delivering mobile services in this band is estimated to be around 70 per cent lower than 2100 Mhz band, used for providing 3G services.

A company interested in buying spectrum in 700 Mhz band will need to shell out a minimum of Rs 57,425 crore for a block of 5 Mhz on pan-India basis. This band alone has the potential to fetch bids worth over Rs 4 lakh crore.

5) The panel has favoured that companies winning spectrum in higher frequency bands — above 1 Ghz like 1800 Mhz, 2100 Mhz, 2300 Mhz — should make 50 per cent upfront payment and the rest in ten years after a 2-year moratorium. In earlier auctions, companies were given option to make 33 per cent upfront payment.

For spectrum below 1 Ghz band such as 700 Mhz, 800 Mhz, 900 Mhz, companies will require to pay 25 per cent upfront and rest in ten years after a 2-year moratorium. It is in line with practice of earlier auctions but differs from Trai suggestion.

(With inputs from PTI)

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