DoT invites application for 2G spectrum auction starting Jan 23

Cutting down proposed 60-day process to 42 days for sale of telecom airwaves, the Department of Telecom has issued the main document -- Notice Inviting Application -- to start spectrum auction from January 23.

"The award of Spectrum in 1800MHz and 900MHz band shall be conducted as a single process.

“A common Notice has been issued only for the sake of convenience," The NIA issued late Thursday night said.

The last date for submission of applications by interested companies is January 4. DoT will hold a pre-bid conference on December 20 and last date for companies to seek clarifications on rules stated in 'Notice Inviting Application' is December 28, NIA said.

As per the initial proposal, DoT had sought 60 days time to start auction from the date cabinet decides on the spectrum base price and the NIA was to be issued after 15 days of the decision.

The DoT has, however, issued NIA within 3 days of Cabinet putting its stamp on minimum price for two sets of 2G spectrum -- 1800 Mhz band and 900 Mhz.

Together, the 900 MHz and 1800 MHz band airwaves are valued at about Rs 48,685 crore (Rs 486.85 billion).

The government has provisioned garnering Rs 40,874.5 crore (Rs 408.74 billion) from spectrum revenue in the Budget.

This includes upfront money from the auction and various fees levied on airwaves used for commercial mobile communications.

The successful bidder will have option to pay final price of spectrum in instalments.

Successful bidder in 1800 Mhz band will have option to pay 33 per cent upfront, while for airwaves in 900 Mhz band upfront payment is 25 per cent.

There shall be a moratorium of 2 years for payment of balance amount of one time charges for the spectrum, which shall be recovered in 10

equal annual instalments.

Successful bidder will have to pay first instalment of the balance amount on the third anniversary of the first payment and subsequent instalment will have to be on the same date of each following year.

In case all spectrum gets sold and companies opt for deferred payment mode then government will be able to get about Rs 15,200 crore (Rs 152 billion) this fiscal from direct sale of airwaves.

New companies will have to bid for minimum of 25 blocks of airwaves, each of 200 Kilohertz frequencies, amounting to 5Mhz in 1800 Mhz band. Existing players will be required to bid a minimum of 3 blocks of airwaves in this band.

A company will be treated as new entrant in a service area where it does not hold spectrum. Airtel, Vodafone and Loop Mobile will also be considered as new entrant for making bids in 900 Mhz band.

All bidders interested in buying 900 Mhz band -- which gives double coverage compared to signals transmitted in 1800 Mhz band -- will have to buy minimum of 5 Mhz of airwaves.

A company (in both band categories) can hold upto 25 per cent of spectrum assigned to all companies in a service area and up to 50 per cent of airwaves (allotted to all companies) in a particular band assigned in a service area, the NIA said.

For the first time in spectrum auction, NIA mentioned about allowing of spectrum sharing, mergers and acquisitions and spectrum trading for which detailed guidelines will be announced later.

On spectrum sharing, the NIA said companies who buy spectrum through the auction will be able to share airwaves for providing mobile phone services.