Govt targets Rs 64,580 crore revenue in 2016-17 from spectrum sale

04 May 2016 Evaluate

The government has targeted revenue of Rs 64,580.92 crore in the current financial year 2016-17 from spectrum auction proceeds. The standing Committee on Information Technology in its report has said that for the year 2016-17, the Ministry of Finance has set the target of Rs 98,994.93 crore, which is inclusive of 64,580.92 crore as spectrum auction revenue.

Recently, the inter-ministerial panel Telecom Commission chaired by telecom secretary JS Deepak has agreed to base prices of various frequency bands recommended by the regulator Telecom Regulatory Authority of India (Trai) for the auction to be held in July this year. At the Trai-suggested base prices, auction of all spectrum would fetch Rs 5.36 lakh crore to the exchequer. The frequencies put on the block include spectrum in premium 700 Mhz band (4G and advance), 800 Mhz (2G,4G), 900 Mhz (3G, 4G), 1800 Mhz (2G,4G), 2100 Mhz (3G), 2300 Mhz (4G) and 2500 Mhz (4G). The total potential revenue of Rs 5.36 lakh crore from the spectrum sale is more than double of telecom services industry gross revenue of Rs 2.54 lakh crore reported in 2014-15 financial year.

Moreover, the inter-ministerial panel has favoured that companies winning spectrum in higher frequency bands - above 1Ghz like 1800 Mhz, 2100 Mhz, 2300 Mhz -- should make 50 per cent upfront payment and rest in 10 years after a 2-year moratorium. Besides, for spectrum below 1Ghz band such as 700 Mhz, 800 Mhz, 900 Mhz, companies will require to pay 25 per cent upfront and rest in 10 years after a 2-year moratorium.

As per the rule approved by the inter-ministerial panel, a company interested in buying spectrum in 700 Mhz band will need to shell out a minimum of Rs 57,425 crore for a block of 5Mhz on pan-India basis. This band alone has the potential to fetch bids of over Rs 4 lakh crore. If all spectrum in 700 Mhz band gets sold at even Trai recommended base price, then successful bidder will need to pay over Rs 25,000 crore after auction. Leading operators have requested to defer sale of 700 MHz spectrum, as the ecosystem for providing services in this band was not developed and sale would lead to underutilisation of the spectrum for several years and block industry's fund.

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