Government Garners INR 1,09,874 Crore from Spectrum Auction with Over 88% Of Offered Airwaves

The spectrum auction in 1800 MHz, 900 MHz, 2100 MHz and 800 MHz band, which commenced on 4th March 2015 and ended on 25th March 2015 after 115 rounds over 19 days, has fetched over Rs 109874 Crore for the government of India.

In all 470.75 MHz has been put to auction in various LSAs. (in 800, 900, 1800 & 2100 MHz bands.) This compares with 390 MHz in Nov. 2012 and 426 MHz in February 2014.

There was robust activity in the all the spectrum bands and vibrant bidding. Prices have significantly increased in 50 of the 69 offerings with bid price being as high as 300% over reserve price in some instances. Over 88% of the spectrum on offer has been provisionally committed at a value of over Rs 109874 Cr. Overall increases over estimated proceeds from auction is about 37%.

In November 2012 the total realization from auction of spectrum in 1800 MHz band was Rs 9407 crore and in Feb 2014 Rs 61162 has been realized. A comparative table of the previous spectrum auctions is attached.

The current auction indicates that the Telecom Industry has full faith in the Government of the day and is confident of the future growth of the telecom sector and the economy of the country due to growth oriented policies of the present government. This also shows that a transparent & fair bidding system can help realize the real value of the natural resource.

Some noteworthy features of present auction are:

This is the first time that spectrum has been offered simultaneously in 4 bands. Previous auctions had conducted auction of different bands sequentially. This auction design has enabled bidders to take informed decisions while placing bids and consider alternatives dynamically.

Another noteworthy feature is that for the first time there is robust demand for 800 MHz band which in previous auctions had seen very sluggish response.

This spectrum auction also shows that natural resources have tremendous resources raising capacity provided government provides a level playing field and adopts a fair and transparent allocation policy coupled with growth and investment friendly regime.

In such a scenario on the one hand private sector invests money to harness resources to earn profits and on the other hand it adds to the national economic growth and employment generation.

Some of the steps taken to enhance transparency as well as to remove barriers to participation include:

· 5 MHz spectrum in 2100 MHz band was released to increase availability of spectrum. Moreover in principle approval was received from Defence to release further 15 MHz in 2100 Mhz band to the telecoms sector

· Earnest money percentage was reduced to between 11-25%, earlier in some instances it was over 40%

· Taking into account suggestions and request from operators the ‘extension’ budget – that is the extra time allowance for bidding was increased from 240 minutes to 360 minutes

· The entire process of decision making on reserve price determination was expedited to enable bringing spectrum to auction at the earliest

· Orders on applicable Spectrum Usage Charges(SUC) were issued before the auction which reduced the regulatory risk of the bidders

· The modalities for liberalization of 800 MHz spectrum was notified

· Transparent and clear rules for allocation of spectrum were notified for the first time. Earlier spectrum other than the contiguous spectrum was allotted randomly