The next round of spectrum auction could lead to windfall gains of Rs 5.36 lakh crore for the government.
Here is a 10-point cheat-sheet
1) For the first time, telecom regulator – TRAI – has recommended putting up spectrum in the 700 MHz band for auction. The premium spectrum band is considered as the most efficient frequency for carrying high-end mobile services.
2) At the base price of Rs 11,485 crore per Mhz , the 700 Mhz band spectrum could alone contribute over Rs 4 lakh crore to the government’s kitty if all frequencies are sold at pan-India level.
3) The government could raise Rs 1.4 lakh crore by auctioning spectrum in 800, 900, 1800, 2,100, 2,300 and 2,500MHz bands. Industry observers say that the most of the interest of telecom operators will be for the 700 MHz and 2100 MHz bands.
4) Operators have opposed the auctioning of 700 MHz spectrum. Bharti Airtel Chairman Sunil Mittal told NDTV Profit the ecosystem is not ready for auction of the 700 MHz spectrum.
5) “I personally believe that 700 MHz spectrum can wait for two years. If 700 MHz is put up for auction, there are three to four players left to buy that. It will put pressure on finances of telecom companies,” he said.
6) Rajan Mathews, director general of industry body – Cellular Operators Association of India – said the real “concern” is over the pricing of spectrum. “I don’t see anyone acquiring pan-India licence for 700 Mhz band. You are looking at Rs 55,000 crore to Rs 57,000 crore which is stiff for any operator. Operators are likely to cherry-pick circles,” he said.
7) Most telecom operators in the country are reeling under high debt. Bharti Airtel has a net debt of nearly Rs 71,000 crore (as of September 2015), while Idea Cellular is reeling under net debt of Rs 22,580 crore (as of September 2015). The high debt levels could also dent the appetite for more spectrum, Mr Mathews said.
8) The telecom industry does not expect the bidding to be as aggressive as the one seen in March 2015, when spectrum in the 800, 900, 1800 and 2100 Mhz bands saw record bids of over Rs 1.1 lakh crore. The 2015 auction was a “must-win” for many operators. Aggressive bidding drove prices sharply higher.
9) Most telecom shares came under pressure today. Idea Cellular fell 4 per cent, Bharti Airtel declined 2.3 per cent while Reliance Communications slipped 1.4 per cent.
10) The telecom regulator’s recommendations will first go to the inter-ministerial panel Telecom Commission and then to the Union Cabinet for final approval. The next round of spectrum auction could be held in May-June this year, said Telecom Secretary Rakesh Garg. (With Agency Inputs)