The Department of Telecommunications (DoT) has issued a notice inviting applications (NIA) in order to facilitate roll-out of 5G and to augment existing telecom services. According to the NIA, the available spectrum in 600 MHz, 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz, 3300 MHz, and 26 GHz bands are part of the auction. A total of 72097.85 MHz of spectrum is to be put to auction.
The DoT, in the NIA, has set the net worth eligibility for bidders at Rs 1 billion per licence service area (LSA) with the exceptions being Jammu and Kashmir (J&K) and North East (NE) service areas where the net worth criteria is Rs 500 million. Additionally, there is a lock-in period of 1 year from the date defined in the NIA for equity of a person whose share capital is 10 per cent or more in the bidding entity on the date of submission of application and whose net worth has been taken into consideration for determining the eligibility for bidding for spectrum. Meanwhile, the lock-in condition for promoters’ equity will be applicable as per the NIA, if the existing licensee uses promoters’ net worth for gaining eligibility to bid in a band, where it does not hold spectrum. This is applicable to holders of expiring licenses as well. Also, lock-in will apply to the entire holding of promoter in the company.
Besides, as per the NIA, the condition of net worth requirement will be applicable on new entrants only in those LSAs where they do not hold any spectrum in any of the bands. A new entrant in all of the bands in an LSA will need to show a net worth of 1 billion (or 500 million in case of NE, J&K) for bidding in all/any of the bands.
The NIA also stipulates that the applicant company shall have a minimum paid up equity capital equal to one-tenth of net worth prescribed above, in addition to the prescribed paid-up equity for obtaining unified license. Companies whose licenses, if expiring in the calendar year 2022 shall be treated as new entrants for this auction.
Meanwhile, the NIA further notes that the auction shall be a ‘Simultaneous Multiple Round Ascending (SMRA) e-auction’. Spectrum will be assigned for a period of twenty (20) years. Successful bidders will be allowed to make payment in 20 equal annual instalments, duly protecting the net present value (NPV) at the interest rate of 7.2 per cent. Further, the spectrum acquired through this auction can be surrendered after a minimum period of ten years. The spectrum usage charges (SUC) for spectrum acquired in this auction has been done away with. In addition, the requirement for a successful bidder to submit a financial bank guarantee (FBG) and performance bank guarantee (PBG) has been dispensed with. Moreover with regard to private network the NIA notes that the licensees can set up isolated captive non-public network(s) for industries using the spectrum acquired through the upcoming auction.