India’s cabinet has decided to proceed with an auction of spectrum in some key frequencies.
The government will auction spectrum in the 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz terrestrial frequency bands. The spectrum licences will then be valid for 20 years. A total of 2251.25 MHz is being offered with total valuation of an estimated INR 3.92 billion (€0.04bn). The auction will start in March 2021.
The overall aim (as well as raising cash for the government) is to boost bandwidth for the country’s telco operators and to provide new commercial services across the nation.
However, the previous auction round, held in 2016 has been described by analysts as a “fiasco” when considerable slices of spectrum remained unsold do to what were described as “excessively high starting prices”.
One likely bidder for fresh capacity is Reliance Jio’s system which will see much of its existing 800 MHz spectrum expire this coming summer. Jio only provides 4G services.
Successful bidders may pay the entire bid amount upfront or pay an initial amount (equal to 25 percent for 700 MHz, 800 MHz, 900 MHz frequency bands, or 50 percent for spectrum in the 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz bands) upfront and the remainder in up to 16 annual instalments.
Each bidder will have to comply with conditions such as block size in which they’ll be able to submit bids, spectrum cap (the maximum amount of spectrum that can be held by each bidder after the completion of the auction), roll-out obligations, and payment terms.
Successful bidders will also be charged 3 percent of their Adjusted Gross Revenue (AGR), excluding wireline services, as spectrum usage fees for the spectrum won through this auction.