The Telecom Ministry gave a clear nod so as to approving auction of mobile phone airwaves here on Wednesday in New Delhi. The government of India agreed on matter giving clearance to the mega spectrum action plan estimated at 5.66 lakh crores INR.
The cabinet expects to generate revenue of 64,000 crores INR from the respective auction out of 2300 MHz spectrum. Rest of 98,995 crores INR will be raised from other levies and services provided by the telecom department. According to the unnamed reliable source, the primary documentation of auction procedure may be likely to get started on July 1, 2016, amid issue of notice inviting application. Following by pre-bid conference on July 6.
Earlier it had proposed a sale of Airwave in700 Mhz, 800 Mhz, 900 Mhz, 1800 Mhz, 2100 Mhz, 2300 Mhz and 2500 MHz bands. At present, the cabinet is interested in the auction of 700 MHz bands as being most premium service provider at a price rate of Rs. 11,485 crores. The following group is estimated to be around 70% lower than 2100 MHz used for 3G mobile network services. Also, this band alone can fetch over worth Rs. 4 lakh crores.
Telecom Regulatory Authority of India (TRAI) suggested that payment distributed in stringent conditions rather than following liberal method. Apparently companies willing to buy spectrum in higher frequency bands i.e. above 1 GHz such as 1800 MHz, 2100 MHz, 2300 MHz, and so on; ought to make payments near about 50% of total cost and the rest amount in 10 years after 2 years of temporary prohibition of a similar kind. It would be the first time that cabinet has asked to make payments in such manner as earlier it was suggested to provide just 33% of upfront payment.
Companies which are willing to opt for spectrum below 1 GHz band such as 700 MHz, 800 MHz, 900 MHz, etc. have to pay 25% of upfront payment and rest of amount in 2 years of the temporary prohibition of a similar case. Although, high-end operators have tried to postpone the sale of 700 MHz spectrum as the system is currently under developed which tends to provide services. Leading to an under-utilization of the spectrum thus hampering the ecosystem. Further, it might also block industry’s funds for several years.
At present, India is world’s second largest mobile phone market after China. The demand for high-speed 4G services would create a rapid expansion in additional airwave. The government will make an announcement regarding the auction procedures later in a press conference in a day or two.