Cabinet approves norms for spectrum auction

NEW DELHI: The stage is set for a mega spectrum sale with the Union Cabinet giving a go-ahead to auctions across seven bands. The sale will see the government put over 2,000MHz of spectrum on sale — the highest-ever in a single auction — which is likely to fetch the exchequer at least Rs 5.5 lakh crore if all the mobile airwaves are sold at the reserve price.There could be a minor delay in the auctions as the Cabinet decided to seek telecom regulator Trai's opinion on the contentious issue of spectrum usage charge (SUC). The move could result in a delay in the issuance of the notice inviting applications (NIA) for the auctions as Trai is expected to take some time in finalizing its views on the matter.While the Telecom Commission — the interministerial panel that is the supreme body on decisions on telecom matters — had suggested a flat 4.5 per cent rate for spectrum acquired across bands at various points in time, a development that would have seen a hike in Mukesh Ambani's soon-to-be-launched Reliance Jio's charge (against the existing 1 per cent in the 2,300MHz band), the decision was not supported by the attorney general.Telecom minister Ravi Shankar Prasad said that the Cabinet had decided to take the opinion of Trai on the matter. It must be noted here that the regulator had in 2013 recommended a flat 3 per cent SUC rate on all kinds of spectrum, but this was never accepted.On the other hand, the telecom commission had earlier this month recommended a 3 per cent SUC rate for the upcoming auctions while suggesting a weighted average formula for the airwaves bought previously at other rates.The fresh round of sale will see the government auction spectrum in the highly-efficient 700MHz band for the first time ever. Reserve price has been fixed at a whopping Rs 57,425 crore for a block of 5Mhz on a pan-India basis. Top operators such as Bharti Airtel and Vodafone have said that prices in this band — which lacks a supporting eco-system at this moment — are "very high" and thus there may not be enthusiastic bids here.However, top officials in the government are hopeful of healthy bids and are even suggesting the entry of a "new foreign player" in the auctions. American mobile company AT&T, one of the world's top operator, may make a bid, though the company has refused to confirm any such move.Apart from the 700MHz band, the airwaves will be sold in the frequencies of 800MHz, 900MHz, 1,800MHz, 2,100MHz, 2,300MHz and 2,500MHz.The government had raked in over Rs 1 lakh crore in the last spectrum auction in 2015 by selling 418MHz spectrum, and will be hoping to rake in a moolah from the exercise this time around. The budget estimates put the collection from telecom and communication services at Rs 98,995 crore for this fiscal, including from payments made by operators towards the auctions.In order to rake in higher revenues for the exchequer, the telecom commission has favoured that companies winning spectrum in higher frequency bands — above 1 Ghz such as 1,800Mhz, 2,100Mhz and 2,300Mhz — should make 50 per cent upfront payment and the rest in ten years after a 2-year moratorium. In earlier auctions, companies were asked to pay at least 33 per cent of their bid amount as upfront payment.