While the government of India is hoping to earn a whopping Rs 65000 crores from the February 2015 spectrum action, telecom operators are facing a major setback as the Union Cabinet has agreed to put up just 5MHz of 3G spectrum for sale. This means that the choice block in the 2100MHz band will see bidders going after it with a lot desperation next month.
Apart from air waves in the 2100MHz band, those in the 1800MHz, 900MHz and 800MHz 2G bands will also be made available for grabs. Considering all the uncertainties which surrounded the supply of 3G spectrum, it’s not surprising to hear that service providers will be fighting over very little.
The Defense Ministry which holds a comparatively large 15MHz chunk of it, won’t vacate it until a later date. As for the 5MHz block which is to be sold, it covers 17 out of 22 telecom circles. The shortage of spectrum would not have occurred had the Telecom Regulatory Authority of India’s (TRAI) suggestions been followed.
The Financial Express notes that the price of 900MHz and 2100MHz air waves are going to touch astronomical levels since operators who own licenses in these bands which are due to expire, will be forced to bid fiercely in order to renew them. The Cabinet will set the cost of this spectrum after the TRAI’s recommendations are approved.
Also see: DoT marches ahead with 3G spectrum auction set for Feb 2015
Owing to shortage of supply in 2010, operators shelled out Rs 16751 crores for 5MHz of 2100MHz spectrum although the base price was Rs 3500 crores. Last year, they bid Rs 4446 crores per 5MHz even with the reserve price fixed at Rs 3705 crores. As mentioned above, the Indian government expects to earn almost Rs 64840 crores in revenue from next month’s auction.
While 5MHz of 3G spectrum will be sold off this February, telecom companies will have to wait until May 2015 in order to lay hands on the 15MHz block. The reserve price 2G spectrum in the 800MHz, 900MHz and 1800MHz bands are Rs 3646 crores, Rs 3695 crore and Rs 2191 crore per MHz, respectively.