India's telecom spectrum auction for the fourth-generation (4G) mobile networks will start today. The Centre is expected to rake in about Rs 3.92 lakh crore at reserve price from the 4G spectrum auction sale if all bids are placed successfully. Telecom majors Bharti Airtel, Reliance Jio and Vodafone Idea, all are likely to take part in the spectrum auction process.
The spectrum auction will be held for 2,251.25 Megahertz (MHz) in seven frequency bands -- 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz and will be offered for 20 years.
The successful winners will be able to boost network capacity after having the rights to use the spectrum. With this, the new players may also start their telecom services.
The bidders will have to comply with conditions such as block size, in which they'll be able to submit bids, spectrum cap (the maximum amount of spectrum that can be held by each bidder after the completion of the auction), roll-out obligations, and payment terms.
As part of payment conditions, the successful bidders may pay entire bid amount upfront or exercise an option to pay 25 per cent for spectrum won in 700 MHz, 800 MHz, 900 MHz bands or 50 per cent for spectrum won in 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz bands upfront. The remaining amount can be paid in up to a maximum of 16 equated annual instalments after a moratorium of two years.
The successful bidders will also have to pay 3 per cent adjusted gross revenue (AGR), excluding wireline services as spectrum usage charges. Better spectrum increases the quality of telecom services for consumers.
Jio was demanding for a 4G spectrum auction for a long time. While Jio wanted the auction to be held at the earliest, Airtel and Vi had said reserve prices for spectrum sale were too high. The Mukesh Ambani-led telco wants the spectrum auction in 700 MHz, 800 Mhz, 900 Mhz, 1800 Mhz, 2100 Mhz and 2500 MHz bands. Most importantly, it wants to buy a major chunk of 800 MHz band that provides 4G services.
It is currently using 800 MHz band of Anil Ambani's bankrupt company Reliance Communications to provide 4G services across 21 circles of the country, which will expire in August this year.
Bharti Airtel's 12.4 MHz of spectrum in the 900 MHz band and 47 MHz in the 1800 MHz band will also come up for renewal. Vi also needs to renew 6.2 MHz of spectrum in the 900 MHz band and 38.2 MHz in the 1800 MHz band.