All 8 applicants to bid for spectrum, no withdrawal

Government's resolution on the contentious issue of spectrum usage fee seems to have found favour with telecom operators with none of them withdrawing their application from airways auction on the last day on Monday.

'No, " a Department of Telecom official said when asked if any of the eight applicants has withdrawn application for participating in auction.

Bharti Airtel, Vodafone, Reliance Jio Infocomm, Idea Cellular, Telewings (Uninor) , Reliance Communications, Tata Teleservices and Aircel are in race to bid for about 403 Mhz of airwaves in 1800 MHz band and 46 MHz spectrum in 900 MHz band.

The Empowered Group of Ministers on telecom, headed by Finance Minister P Chidambaram, decided on Monday to levy annual spectrum usage charge (SUC) on new airwaves for mobile services at 5 per cent of their adjusted gross revenue earned from telecom services. The present rate is in the range of 3-8 per cent.

Telecom Regulatory Authority of India (TRAI) had recommended a flat SUC of 3-5 per cent across all players.

This had been backed by GSM operators such as Airtel, Vodafone and Idea Cellular though  RJio and Videocon had opposed it.

On EGoM's decision, GSM industry body COAI said that it does not address the anomaly of differential spectrum usage charge and will lead to

different rates being applied to telecom operators for holding similar spectrum.

"In turn, it will affect the potential investments to the sector, which is already facing hurdles presently. In addition, opportunities for arbitrage that exist between different bands and technologies would continue to exist," COAI director general Rajan S Mathews said.

Following the EGoM decision, Airtel yesterday approached the Department of Telecom seeking reduction of bank guarantees from Rs 3,700 crore (Rs 37 billion) to about Rs 2,900 crore (Rs 29 billion) that it had submitted for the upcoming spectrum auction, indicating a toning down of its bids for the airwaves.

A new player needs to submit a minimum bank guarantee of Rs 1,918.75 crore (Rs 19.18 billion) if it plans to bid for pan-India spectrum in the 1800 MHz band.

For the scarce 900 MHz band, companies are required to deposit Rs 438.75 crore (Rs 4.39 billion) as minimum earnest money if they want to bid in all three metros - Delhi, Mumbai and Kolkata.

Government expects a minimum of Rs 11,300 crore (Rs 113 billion) in upfront payment from the upcoming auction of airwaves worth Rs 48,685 crore (Rs 486.85 billion) at the base price. Successful bidders can pay the remaining amount over a maximum of 10 yearly instalments.

In November 2012, bids worth Rs 9,407 crore (Rs 94.07 billion) were received for spectrum worth Rs 28,000 crore (Rs 280 billion) that was offered.