The Department of Telecommunications (DoT) has issued a notice inviting application (NIA), as per which the second round of 2G spectrum auction will start from January 23, 2014. In the document, DoT has reduced the earlier 60 day timeline for the auction of 2G spectrum to 42 days.
DoT would be conducting the auction for spectrum in the 1800 MHz band and 900 MHz band simultaneously. As per the NIA, the last date for submission of applications by potential bidders is January 4, 2014. DoT will hold a pre-bid conference on December 20, 2013 and the last date for companies to seek clarifications on the regulations stated in the NIA is December 28, 2013.
As per the initial proposal, DoT had sought 60 days time to start the auction from the date the cabinet finalised the spectrum base price and the NIA was to be issued after 15 days of the cabinet?s decision. However, with a view to fastrack the auction process, DoT has issued the NIA within three days of the cabinet deciding the reserve price for 2G spectrum to be auctioned in the 1800 MHz and the 900 MHz bands. The government is expecting to garner revenue worth Rs 408.74 billion from the sale of spectrum in the 1800 MHz and the 900 MHz bands.
As per the NIA, successful bidders will have the option to pay the final price of spectrum in installments. The successful bidder in the 1800 MHz band will have the option to pay 33 per cent of the spectrum price upfront, while for spectrum in the 900 MHz band, upfront payment is pegged at 25 per cent. In addition, there shall be a moratorium of two years for the payment of the balance amount which comprises of one time spectrum charges.
This shall be recovered in 10 equal annual installments. Further, successful bidders will have to pay first the installment of the balance amount three years from the date of payment of the first installment and subsequent installments will have to be paid on the same date of each following year.
New companies will have to bid for a minimum of 25 blocks of airwaves, each of 200 KHz frequencies, amounting to 5 MHz of spectrum in the 1800 MHz band. Existing players will be required to bid for a minimum of three blocks of spectrum in this band. A company will be treated as a new entrant in circles where it does not hold spectrum. Further, bidders interested in purchasing spectrum in the 900 Mhz band will have to bid for a minimum of 5 MHz of spectrum.
The NIA states that in both bands i.e. 1800 MHz and 900 MHz, a company can hold up to 25 per cent of spectrum assigned to all companies in a circle and up to 50 per cent of spectrum (allotted to all companies) in a particular band assigned in a circle. As regards to spectrum sharing, the NIA states that the companies which win spectrum through the auction will be able to share spectrum for providing mobile phone services.
