Enter 5G: Union cabinet to auction telecom spectrums worth Rs 3.9L crore

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 the assignment for a validity period of 20 years. A total of 2251.25 MHz is being offered with a total valuation of Rs. 3,92,332.70 crore (at reserve price).

By winning the right to use spectrum through the auction, incumbent telecom service providers will be able to augment their network capacity whereas new players will be able to start their services.

In the auction, bidders will have to comply with parameters/conditions such as block size in which bidders will be able to submit their bids, spectrum cap i.e. the maximum amount of spectrum that can be held by each bidder after the completion of the auction, roll-out obligations, payment terms etc.

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

In addition to the bid amount, successful bidders will also have to pay 3% of the Adjusted Gross Revenue (AGR) excluding wireline services as spectrum usage charges for the spectrum won through this auction.

"The spectrum auction is a transparent process of spectrum assignment to successful bidders. Sufficient spectrum availability increases the quality of telecom services for consumers," the Ministry of Telecom said.

The ministry also added that Telecom Sector today is a key infrastructure provider with strong linkages with economic growth, direct and indirect employment generation, and expansion of Digital India. Hence the above decision of the Cabinet is expected to have a salutary impact on all the aspects.

The Department of Telecom (DoT) has identified 300 megahertz (MHz) of spectrum blocks for 5G services. However, the defence ministry and Department of Space (DoS) have made claims for about 125 MHz of the spectrum, leaving only 175 MHz of airwaves for telecom companies.

TRAI has recommended the base price of the proposed 5G spectrum in 3,300-3,600 MHz band at about Rs 492 crores per Mhz unpaired spectrum on the pan-India basis. This comes to around Rs 50,000 crores for 100 MHz of 5G spectrum required to deliver 5G services.