Telecom regulator recommends spectrum reserve prices, next round of auctions likely in May-June

New Delhi: The Indian telecom regulator on Wednesday issued its recommendations on valuation and reserve price of spectrum in the 700, 800, 900, 1800, 2,100, 2,300 and 2,500 MHz bands. Given the high base price for the 700 Mhz spectrum and stress on their balance sheets, top telecom players may not bid for the radiowaves in this premium band, says credit rating firm Fitch.

According to an official statement here, the sector regulator recommended that entire available spectrum (2x35 MHz) in the 700 MHz band should be put to auction in the upcoming auction.

TelecomThinkStock2The Telecom Regulatory Authority of India has recommended a record base price of Rs 11,485 crore per Mhz for 700 Mhz, which is to be among the radiowaves that are to be auctioned in the forthcoming round of bidding. If all the available frequencies get sold at Trai suggested price then it can alone contribute over Rs 4 lakh crore.

It recommended that spectrum in 700 MHz band should be offered in the block size of 5 MHz (paired). "In case a TSP is able to win more than one block of spectrum in the upcoming auctions, it should be allocated spectrum in contiguous blocks."

The Telecom Regulatory Authority of India (TRAI) recommended that the entire available spectrum in 2100 MHz band should be put to auction.

The TRAI had issued a consultation paper on it in November 2015 seeking stakeholders' comments.

"In March 2015, the telcos committed the largest-ever investment of USD 17.7 billion, mainly due to the necessity to retain their expiring spectrum to avoid network disruption. The auction saw aggressive bidding as spectrum offered was limited. We believe that there are far fewer reasons for telcos to invest as much in the 700MHz auction," Fitch said.

The government is likely to go for the next round of telecom spectrum auctions around May-June this year, Telecom Secretary Rakesh Garg said here recently.

The industry expressed its satisfaction over the regulator's decision to hold the auction. However, it expressed concerns over the steep pricing of 700 and 2,100 MHz, which will be the much sought after bands.

"We are happy that another round of auction will take place. It will help in removing the supply constraint. But the prices of the 700 and 2,100 MHz are too steep for the industry. We expect most of the activities in these two bands," Rajan S.Mathews, director general, Cellular Operators' Association of India, told IANS.

The TRAI recommended reserve price of Rs.1,595 crore for 700 Mhz and Rs.554 crore for 2100 MHz in the Delhi circle. Both 700 and 2,100 MHz are of utmost importance to the industry stakeholders as these two bands are carriers of third generation (3G) and fourth generation (4G) telephony.

He said the regulator has indicated that it will put 60 percent more spectrum in auction than the current holding across all the bands.

At present, the total holding of spectrum across all the bands is between 2,700-3,000 MHz.

The authority also recommended that Department of Telecom (DoT), in coordination with defence and the telecom service providers (TSP), should complete the harmonization process in the 1,800 MHz band before upcoming auctions so that the entire spectrum that is made available due to this exercise is placed for bidding.

"The available spectrum must be put to auction in contiguous blocks, preferably in the block of 5 MHz."

The regulator suggested that spectrum in the 2,300 MHz and 2,500 MHz bands should be put to auction in the block size of 10 MHz (unpaired).

Currently, spectrum trading in 2,300 or 2,500 MHz band is permitted in the block size of 20 MHz.

"The authority also recommends that after network synchronisation of all the TDD (time-division duplexing) networks, spectrum trading in 2,300 or 2,500 MHz band should be permitted in the blocks of 10 MHz."

The TRAI recommended that existing provision of a cap of 25 percent of the 'total spectrum assigned' in 700/800/900/1,800/2,100/2,300/2,500 MHz bands and 50 percent within a given band in each of the access service area shall apply for total spectrum holding by each TSP.


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Updated Date: Jan 30, 2016 03:58:04 IST

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