The telecom department on Friday said it would auction 8,305 Mhz of spectrum at an aggregate reserve price of Rs 5.22 lakh crore in March-April.

“The Digital Communication Commission (DCC) has approved the recommendation of the Telecom Regulatory Authority of India. We are hopeful that auction shall be conducted in March-April,” telecom secretary Anshu Prakash told reporters here. DCC is the apex decision making body of the telecom department.

“We are going to auction 8,305 megahertz, this is spectrum which is already available or which will become available in the next 18 months or so. The reserve price calculated comes to about Rs 5, 22,850 crore,” he said.

The DCC did not change the reserve prices proposed by Trai but altered the terms of upfront payment.

The Telegraph

If the government allocates spectrum within 30 days, successful bidders will have to pay 25 per cent of the amount upfront for sub 1 GHz spectrum, and 50 per cent upfront for higher frequency bands.

Instalment will be spread over a period of 16 years. There will be a two-year moratorium for payment after the upfront amount is given. This means instalment will have to be paid from the third year, in 16 annual instalments.

If the government does not allocate spectrum within 30 days, teh successful bidders will be required to make only 10 per cent upfront payment for sub-1 GHz band and 20 per cent for above 1 GHz band for the set of spectrum that will not be available after 6 months or 12 months and balance (15 per cent for sub 1Ghz and 30 per cent for more than 1Ghz) before 1 month of their availability.

Prakash defended the high reserve price on the grounds the winning bidders will stagger the payment. “It is not that the entire amount has to be paid upfront. So, it doesn’t appear to be that high.”

Trai had initially given recommendation for spectrum valued at Rs 4.9 lakh crore. The telecom department has now included spectrum that is set to expire and are with Reliance Communications and Bharti Airtel (eight circles each) and Vodafone and Idea Cellular (four circles each).

The high reserve prices are expected to come as a setback to Airtel and Vodafone Idea, which had deemed them as too expensive.

The Cellular Operators Association of India (COAI) said the reserve price was too high, given the sector is under severe financial stress. “With prices 4 to 6 times higher than that of similar spectrum sold recently in several countries, telecom service providers will find it very difficult to raise funds to participate in the auctions,” Rajan S. Mathew, director-general of the COAI, said.

“The quantum of spectrum in the 5G band being put up for auction will be only 175 MHz (per circle), woefully inadequate for operators to roll out robust networks and services,” he said. Out of the 8,300 Mhz of airwaves across 22 circles, 6050 Mhz are allocated to high-speed 5G.