Spectrum auctions to be a successful sale for the government: Telecom minister

Ahead of one of the biggest spectrum sale, which will debut 4G airwaves in 700 MHz band and a total 2,142 MHz of airwaves across 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz, telecom minister Ravi Shankar Prasad has said that reserve prices worked out for the upcoming mega spectrum auctions are at “reasonable levels” and will result in a “successful” sale for the government.

Earlier, a Parliamentary panel had said that the government targets revenue of Rs 64,580.92 crores in the current financial year from spectrum auction proceeds. The inter-ministerial panel Telecom Commission (TC) agreed to base prices of various frequency bands recommended by the regulator 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 crores to the exchequer.

Telecom Commission, the highest decision-making wing in the department of telecommunication (DoT), set starting price for sale of 4G airwaves in the coveted 700 MHz band at Rs 11,485 crore a unit. At this price, a 5-MHz pan-India block would cost Rs 57,425 crore, more than half of the entire proceeds of the last spectrum auction. If all spectrum in 700MHz band gets sold at even TRAI recommended base price, then successful bidder will need to pay over Rs. 25,000 crores after auction. As per payment rule suggested by the panel, the panel has favored that companies winning spectrum in higher frequency bands above 1Ghz like 1800MHz, 2100MHz, 2300MHz should make 50 percent upfront payment and rest in 10 years after a 2-year moratorium. Few operators have dubbed prices in the 700 MHz band as “highly expensive” and claimed that the 2G ruling mandating spectrum auction had virtually destroyed the sector and left them mired in debt.

As per budget estimates, the government expects to rake in Rs 50,000 crore, as 25% upfront payment from spectrum buyers this year. The government expects revenue of Rs 98,995 crore from communication services in 2016-17, which includes proceeds from spectrum auction and other fees levied by DoT.