One of the first few things the new government, which takes charge after May16, would have to decide on is the next round of spectrum auctions for licences that expire in December 2015 and early 2016.
This is because the department of telecommunications has sought the Telecom Regulatory Authority of India’s recommendation for reserve price of spectrum in the 900 and 1800-Mhz bands held by the operators whose licences come up for renewal in this period.
The DoT has sought Trai’s recommendation as the telecom commission, the highest apex policy making body on telecom issues, decided in 2012 that auctions should be conducted 18 months prior to the expiry of the licences. ?Accordingly, Trai is requested to provide recommendations on applicable reserve price for all the service areas for auction of spectrum in the 900 Mhz and 1800-Mhz bands,? said DoT’s letter to the Trai secretary.
In February, the government earned around Rs 61,000 crore from sale of spectrum in 900 and 1800 Mhz bands. Licences of Bharti Airtel, Vodafone India, Idea Cellular and Reliance Communications in certain circles such as Punjab, Haryana, Andhra Pradesh is set to expire in December 2015 and early 2016.
In the February auction for 900 Mhz, only three metro circles were put up for auction viz Delhi, Mumbai and Kolkata. While base price of these three circles were set at Rs 360 crore, Rs 328 crore and Rs 125 crore, the government earned Rs 23,589.62 crore from this efficient band of spectrum, which can be used to provide both voice and high-speed data services, including 4G services. The final bid price was up by 72% of base price for Delhi and Mumbai and around 60% higher than reserve price set for Kolkata circle.
In the 2015 auctions, 900 Mhz spectrum would come up for sale in 18 circles, including Kerala, Madhya Pradesh, UP, Bihar, Maharashtra and others. Bharti Airtel holds the maximum 900 Mhz spectrum of 7.2 Mhz in Andhra Pradesh and Karnataka. Only a limited quantity of spectrum in the 1800 Mhz band will become free in 2015 that would be put up for sale, so the entire focus would be on the highly efficient 900 Mhz band.
Analysts said Trai will fix a price which is on par with the closing price of February 2013 auctions for both 1800 and 900 Mhz bands.
However, any arbitrary and high reserve price may reduce interest and lead to a failed auction since telcos now have other options of trading and sharing to access radiowaves, added analysts.
With the 900 Mhz band highly efficient, the government expects windfall gains from 2015 auctions.
Non-tax revenues from sale of spectrum has been a source of income to bridge the fiscal deficit for the government. In 2010, the sale of 3G and broadband spectrum earned the government over Rs 1 lakh crore.