The Department of Telecommunications (DoT) has scheduled the 2G spectrum auction for February 3, 2014. The auction will offer 403.2 MHz of spectrum in the 1800 MHz band for all 22 circles and 46 MHz of airwaves in the 900 MHz band for three circles – Delhi, Mumbai and Kolkata. In 2013, the government had fixed the base price for per MHz of 1800 MHz spectrum at Rs 17.65 billion, which is about 26 per cent lower than the price set in the previous auction. For 900 MHz spectrum, the base price per MHz was set at Rs 3.6 billion for Delhi, Rs 3.28 billion for Mumbai and Rs 1.25 billion for Kolkata, which was about 53 per cent lower than the price set in the previous auction.

As per the auction guidelines, existing licensees will be treated as “new entrants” in service areas for the bands in which they do not hold spectrum. Bidders whose licences will expire in 2014 will be treated as new entrants during the spectrum auction. Further, there is a cap of 25 per cent on the total spectrum assigned in each band.

The licences offered after the sale will be technology neutral. However, if the bidders are deploying a technology besides GSM/CDMA/WCDMA, they should provide details of the proposed technology to be deployed within a month of obtaining the licence.

In the case of a technology change while rolling out networks, information about the new technology should be given at least a year before base station sites based on it are offered for testing. Prior clearance will be required for technologies other than GSM, CDMA, WCDMA, long term evolution and Wi-Max.

Also, new entrants should have a net worth of Rs 1 billion for each service area besides Jammu & Kashmir and the Northeast, where the net worth should be Rs 500 million.

Operator interest

After two failed attempts to raise funds from the 2G spectrum auction, the government hopes to generate at least Rs 480 billion from these auctions at the approved reserve price. However, analysts expect the auction to yield over Rs 800 billion. This is because contrary to expectations and the experience when most operators boycotted the previous two auctions complaining that the minimum bid prices were too high, eight players – Vodafone India, Bharti Airtel, Aircel, Tata Telservices Limited, Idea Cellular, Telewings (Uninor), Reliance Communications and Reliance Jio Infocomm Limited (RJIL) – have applied to participate in this auction.

Bharti Airtel and Vodafone India’s expressions of interest in the auction suggest that they are keen to acquire new spectrum in some key cities as they will have to renew their licences after 2014.

While new players like Videocon, Sistema Shyam TeleServices Limited and Loop Mobile will not participate in the auction, Telewings, which had bought frequencies in select areas in the 2012 auction, is keen to bid for spectrum in this auction.

For the industry, the surprise factor is RJIL’s interest in acquiring 2G spectrum. Its entry is expected to lead to intense bidding. RJIL, which acquired 4G spectrum three years ago, will be able to offer basic mobile services if it wins frequencies in the upcoming auction.