DoT May Not Auction All 700MHz Spectrum At Once

The Department of Telecom (DoT) is unlikely to auction the entire spectrum in 700MHz as it feels telecom operators may not bid aggressively for the band, due to high reserve price.

Also, a DoT committee has found some anomalies regarding the base price suggested by the Telecom Regulatory Authority of India (Trai), which the committee says requires further clarification.

According to a DoT official, the committee has already prepared its report, which will be discussed by the Telecom Commission in its meeting scheduled for March 28. The official said the DoT committee is of the view that all the available spectrum in 700MHz should not be put up for auction as it might not get sold.

The DoT is soon going to write back to the Telecom Regulatory Authority of India (Trai) for clarifications on a host of issues regarding the upcoming spectrum auction, the official added.

Trai in its spectrum pricing recommendations for the next auction had suggested a record base price of Rs. 11,000 crores per MHz on all-India basis. Spectrum in 700MHz is considered more economical for providing telephony services compared to other bands like 900MHz or 1800MHz. However, analysts feel given the evolving ecosystem around the new bands and steep pricing, they expect limited participation from the telecom companies in the upcoming spectrum auctions.

Ratings firm ICRA expects spectrum worth Rs. 60,000-80,000 crores to be sold in this auction, which would add to the already sizeable debt levels of the industry.

Trai has suggested a plan for spectrum sale, expected to be held in July, which has a potential to fetch Rs. 5.36 lakh crores. It will be the biggest-ever auction in terms of value and is more than double the gross revenue of the telecom services industry.

Telecom service providers had a gross revenue of Rs. 2.54 lakh crores in 2014-15.

According to Trai paper, the cost of delivering mobile services in 700MHz band is approximately 70 percent lower than 2100 MHz frequency, which is widely used for 3G services.