Govt gives nod to next round of spectrum auction: Key points to know

The Union cabinet on Wednesday approved the department of telecommunications’ proposal to conduct spectrum auction plan. Through the auction, spectrum will be assigned to the successful bidders for providing commercial mobile services.

“The auction will be for spectrum in 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz frequency bands, “ the government said in a press release. “A total of 2251.25 MHz is being offered with a total valuation of Rs. 3,92,332.70 crores,” it also said.

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By winning 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.

According to Jio, spectrum worth Rs 3.92 lakh crore is lying unused with the department of telecommunication for auction. The telecom ministry gets an average revenue share of 5% as spectrum usage charge from telecom operators which is calculated based on their spectrum holding and 8% as licence fee from the revenue earned by them from sale of communication services.

Here are key points to know about the auction:

1) Spectrum will be offered for assignment for a validity period of 20 years. The last auction was held in 2016.

2) In the auction, bidders will have to comply with parameters mandated by the government like block size in which bidders will be able to submit their bids, spectrum cap maximum amount of spectrum that can be held by each bidder after the completion of the auction, roll-out obligations, payment terms etc.

3) Successful bidders will have the option to pay the entire id amount in one go or can opt for the option to pay a certain amount upfront and the remaining can be divided into 16 instalments. The instalments will begin after a moratorium of two years.

4) Bidders that won 700 MHz, 800 MHz, 900 MHz bands will be required to 25% upfront in case they opt for EMI option. For 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz bands, 50% of payment will be needed.

5) 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.

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