DoT expects March auction to raise at least Rs 39,798 crore

NEW DELHI: The telecom department ( DoT) has estimated that exchequer will get a minimum of Rs 39,798 crore if the government sells all airwaves that are put up for sale at just the base price during the next round of spectrum auctions in March 2013.


The communications ministry is also finalising rules for the upcoming airwaves sale process, and as per the Notice Inviting Applications ( NIA), that will be shared with potential bidders next month, a maximum of 15 MHz or units of airwaves will be sold in both the 1800 MHz and 900 MHz bands in the metro cities of Delhi and Mumbai (refer table).

The rules also add that incumbent mobile phone companies will have to compulsorily bid in the upcoming auctions to renew their permits in the three metros — Delhi, Mumbai and Kolkata. But the DoT’s proposed auction rules are set to be challenged as Vodafone on Thursday sought the extension of its mobile permits in Delhi, Mumbai and Kolkata for 10 years without any change in the licence conditions.

“We respectfully submit that in our view, extension of licence period is continuation of the already set up network, including continuation of existing spectrum, which is intrinsic to our licence and is being used for providing service to the customers under the licence,” Vodafone said, in three identical letters to telecom secretary R Chandrasekar.

Recently, the panel of ministers on spectrum headed by finance minister P Chidambaram had decided that incumbents such as such as Bharti, Idea and Vodafone have to compulsorily take part in the auctions that are scheduled to be held before Marchend 2013 to renew their mobile permits in the three metro regions of Delhi, Mumbai and Kolkata.

Prior to this, mobile phone companies whose permits were coming up for renewal in 2014 were assured of retaining the total quantum of 2G airwaves they currently hold, by paying ‘market rates’ to ensure licence continuation, without having to participate in an auction process. This will also ensure that the upcoming auctions will not turn out to be a failure like the recently concluded sale process, where the Centre failed to attract even a single bid in key circles such as Delhi and Mumbai.



The 2G auctions that ended in mid-November turned out to be a damp squib with the government getting less than a fourth of its revenue target of Rs 40,000 crore as there were no takers for about 57% of the airwaves that were put on sale.

Vodafone’s communication also challenges the recent decision by the panel of ministers on spectrum that airwaves held by incumbents in the 900 MHz be ‘refarmed’, or reallocated, through an auction process 18 months prior to their renewal date.

The Chidambaram-headed interministerial panel had decided that incumbents could retain 2.5 MHz or units of airwaves in the more efficient 900 MHz frequency band if they agreed to pay double the price discovered at the recently concluded auctions, and the remaining frequencies would be put up for sale.

This means an operator such as Vodafone, which has 8 MHz of airwaves in the 900 MHz band in Delhi, would get to retain 2.5 units in this band, and would also get an additional 5.5 MHz in the 1800 MHz at market rates, during licence renewal.

Besides, Vodafone is assured of these many units of airwaves in Delhi only if it were to bid for this quantum of spectrum in both the 900 MHz and 1800 MHz band in the upcoming auctions. The draft auction rules, a copy of which was reviewed by ET, states that incumbents will be treated as new entrants, when bidding for airwaves in the three metros.

The rules also add that new players, who are currently not present in the mobile space, can also participate in the airwaves sale process. Besides, it also states that all companies can bid for a maximum of 25% of the airwaves that is available for sale in that particular region. The NIA further states that auctions for the 1800 MHz and the 900 MHz bands will be held simultaneously and successful winners will be given unified licences.