The biggest airwave auction that will offer very high data speed starts today

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The biggest airwave auction that will offer very high data speed starts today
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India's biggest auction of telecom spectrum kicks off today with seven operators in fray for a total of 2,354.55 MHz across seven bands, towards which a reserve price of Rs 5.66 lakh crore ($85 billion) has been fixed by the government.

The companies that have qualified for the auction are Bharti Airtel, Vodafone India, Reliance Jio Infocomm, Reliance Communications, Idea Cellular, Aircel and Tata Tele, who have furnished total earnest money of Rs.14,653 crore.

Given that earnest money deposit is roughly 10% of what a telecom operator can bid for, experts said the expectations of Rs 5.66 lakh crore ($8.5 billion) was already far-fetched.
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Top investment banker Goldman Sachs has predicted that total proceeds from the auction will be around $7 billion -- less than half of $16 billion that was fetched in the last year’s auction and sharply below $85 billion if all spectrum was sold at the reserve price.

Ahead of the auctions, Telecom Secretary J.S. Deepak has said the process would be transparent and the award of airwaves quick. "One new bidding-friendly measure we have adopted this year is that spectrum won will be assigned within 30 days from the date of upfront payment."
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Interest on deferred payment will be 9.3 % this year against 10 per cent in 2015.

For the auctions -- which will be an Internet-based, online process -- the government has hired the services of 'mjunction services'. The government said the mock auctions conducted earlier this week went off well.

The auction timings are from 9 a.m. to 7.30 p.m., Monday to Saturday.

The 2,300-plus MHz of airwaves on the block for telecom operators are in seven bands -- 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz and 2,500 MHz. In the previous auction 470.75 MHz was on offer, which was set to fetch the exchequer $17 billion during its tenure.

The government has decided to allot the right to the spectrum won through auction for 20 years.
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The operators will have the choice of both upfront and instalments payment options. The service providers who win airwaves below 1 GHz bandwidth will have to pay 25 per cent upfront, and for those winning above that, the upfront payment will be 50 per cent.

For the successful bidder, the lock-in period of equity in the company has been reduced to one year instead of the earlier stipulation of a minimum period of three years or completion of roll out obligation, whichever is later.

In a meeting of the cabinet in June, chaired by Prime Minister Narendra Modi, an official nod was given for the reserve price and the auction norms. The spectrum usage charge was subsequently fixed at 3 per cent of the adjusted gross revenues of an operator.

Coming to the finer points of the auction, and going by the earnest money deposited, four players appear to be serious -- Reliance Industries (Rs 6,500 crore), Vodafone (Rs 2,740 crore), Idea (Rs 2,000 crore) and Airtel (Rs 1,980 crore).

"We expect the auction to be very important for Vodafone and Idea as they have their 3G plus 4G footprint in just nine and seven circles, respectively," Goldman Sachs analytic told a news agency.
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"Bharti and Jio have much wider network coverage for wireless broadband versus Vodafone and Idea and we believe operators will use the upcoming auction to plug 3G/4G gaps. We also expect Bharti and Jio to buy additional 3G and 4G spectrum to augment data capacity on their networks."