Government Eyes Rs. 1 Lakh Crore From Spectrum Auction: 10 Facts

The biggest-ever auction of 2G and 3G spectrum started on Wednesday and is likely to fetch the government over Rs.82,000 crore based on the reserve price. But analysts have said that the government will get around Rs. 1 lakh crore from the sale of radiowaves used for mobile telephony.

Here is a 10-Point Cheat-Sheet

1) Most of the spectrum being put up for the auction is currently held by Airtel, Vodafone, Idea Cellular and Reliance Telecom. As many of their permits in different circles are expiring, it becomes mandatory for these companies to win spectrum if have to offer services. Analysts say this will lead to a fierce bidding war among telecom operators.

2) Mobile licences for Idea Cellular’s 9 circles, Airtel’s 6 circles and 7 circles each of Vodafone and Reliance Telecom are coming up for renewal. Overall 29 licences in 18 service areas will expire in 2015-16.

3) Eight companies are in the fray, including Reliance Jio, the telecom arm of Mukesh Ambani-led Reliance Industries.

4) Bharti Enterprises Chairman Sunil Mittal has indicated that the auction might put pressure on the financials of the telecom companies and this might lead to a rise in tariffs. “It (spectrum auction) puts pressure on balance sheets… may result in rise in tariff,” Mr Mittal said. Bharti Airtel, the flagship company of Bharti group, is the biggest telecom operator of the country.

5) Successful bidders have to make an upfront payment of 25-33 per cent of the final sale price. This may help the government to garner nearly Rs. 25,000 crore immediately through the current round of spectrum auction.

6) Eight telecom operators have deposited a whopping Rs.20,435 crore as earnest money for the auction of radiowaves. Reliance Jio has paid the highest deposit of Rs.4,500 crore, followed by Rs. 4,336 crore from Bharti Airtel.

7) The government is selling 380.75 MHz of 2G spectrum in three bands – the premium 900 MHz band, 1800 MHz and 800 MHz. Also, 5 Mhz in the 2100 Mhz band, or 3G spectrum, has been put up for auction.

8) At the minimum or reserve price for 2G spectrum, the government will get Rs. 64,840 crore while the 3G spectrum will fetch at least Rs. 17,555 crore.

9) The Supreme Court had earlier allowed the government to go ahead with the spectrum auction subject to certain riders. Hearing a case against the government’s auction conditions, the top court said the outcome of the telecom spectrum auction will be subject to its final ruling. The top court will hear the matter on March 26.