Cabinet nod for 4G spectrum sale, base price lower than TRAI recommendation

Prasad said his ministry plans to issue a notice to invite bids in Dec and hold the auction by March.

Chinese telecom gear major Huawei in the past has clashed with the Canada and US authorities over espionage charges. | Representative Photo: iStock

The Union Cabinet has given its nod for a proposal to auction 2,251.25 megahertz of spectrum at the base price of ₹3.92 lakh crore. These will only be for 4G services as the government has decided not to auction frequencies in 3,300-3,600 Mhz bands that were identified for 5G services.

The cabinet clearance for the auction came on Wednesday (December 17). Union Telecom Minister Ravi Shankar Prasad said that his ministry plans to issue a notice to invite bids in December and hold the spectrum auction by March.

“The auction will be for spectrum in 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz frequency bands. Spectrum will be offered for assignment for a validity period of 20 years. A total of 2,251.25 MHz is being offered with a total valuation of Rs 3,92,332.70 crore (at reserve price),” said an official statement.

Meanwhile, reports suggest the base price of the spectrum which will be auctioned in this round is lower than the recommendations of Telecom Regulatory Authority of India (TRAI). The Digital Communications Commission, the apex decision making body of the department of telecom, had accepted the recommendations.

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The Digital Communications Commission had in May approved the spectrum auction plan worth ₹5.22 lakh crore which included radiowaves for 5G services as well. But a part of the 300 Mhz spectrum identified for 5G services is being used by the Navy, and the Department of Space has also made claims on a significant portion of these radiowaves.

The major private players in the telecom industry had been demanding the government to lower the base price of 5G spectrum as each operator will need to shell out around ₹50,000 crore for the required quantum of radiowaves for the next generation services.

Prasad did not reply to questions on the status of 5G spectrum. The minister said that the government has retained rules of 2016 for payments in the upcoming auction as well.

Besides the bid price, the telecom operator will also need to pay a 3 per cent revenue share to the government every year. “In addition to the bid amount, successful bidders will also have to pay 3 per cent of the adjusted Gross Revenue (AGR) excluding wireline services as spectrum usage charges for the spectrum won through this auction,” the statement said.

“Successful bidders may pay entire bid amount in one go (upfront) or may exercise an option to pay a certain amount (25 per cent for spectrum won in 700 MHz, 800 MHz, 900 MHz bands or 50 per cent for spectrum won in 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz bands) upfront and remaining amount in a maximum up to 16 equated annual instalments, after a moratorium of two years,” the statement said

(With inputs from agencies)