Vodafone, Airtel to enter February spectrum auction

Top telecom operators Vodafone and Bharti Airtel have applied for spectrum licences despite the uncertainty on issues such as spectrum usage charge, merger and acquisition guidelines, spectrum sharing and its trading.

The country's top telecom operators Vodafone and Bharti Airtel have applied for taking part in the spectrum auction scheduled for 3 February, raising hopes that this round will see strong participation.

''Vodafone has filed the first application, followed by Airtel. We are expecting most of the companies to apply,'' an official source said.

Today was the last date for submitting the applications, which the companies can withdraw by 27 January.

In the last round of auction held in March 2013, none of the GSM operators had bid for radiowaves, citing high reserve or base price.

The applications come amidst uncertainty on a number of issues such as spectrum usage charge, merger and acquisition guidelines, spectrum sharing and its trading.

Telecom Secretary MF Farooqui said today that all issues will be resolved before auction.

The government is expecting a minimum of Rs11,300 crore from the upcoming spectrum auction. It has set a revenue target of Rs40,874.50 crore for this fiscal from the auction, including auction amount, one-time spectrum charge and annual regular licence fee.

About 403 megahertz of 2G spectrum in the 1800 MHz band and about 45 MHz of spectrum in the premium 900 MHz band is being put up for auction.

In the auctions slated for 3 February 2014, spectrum for 900 MHz and some 1800 MHz will be auctioned.

The spectrum that is available with DoT, is being brought back for redistribution among the bidders. It will be made available to the winners immediately after the auction after they fulfill the necessary procedural requirements.

However, in case of the three metros, the 900 MHz spectrum and some 1800 MHz spectrum, which is being auctioned, is currently not available with DoT.

This spectrum can be made available to the winner in the auction only after the expiry of the existing licences in November 2014, which is 10 months from now (as per DoT's stated policy this period could be as long as 18 months, which would have been the case if there had been any participation in the auction in March 2013).

Since, the winners of the spectrum licences are being asked to pay for the spectrum much before it becomes available with DoT for allocation,  telecom companies have cried foul, saying there is no rationale to ask the winners to pay simultaneously for spectrum becoming available at different timings with a long gap in between.

According to these telcos, in case of the 900 MHz spectrum where the effective date is the date of expiry of existing licence and also where the operator chooses to get the 1800 MHz spectrum through the auction on the date of expiry of licence, the payment should be required to be made on the date of expiry of licence. This should apply to all winners of 900 MHz, as they will not be able to use the spectrum won in this auction till the date of expiry of the relevant licence.

Even for 1800 MHz, if the operator whose licence is expiring does not bid for it and that spectrum is won by another operator, then also the current operator will not vacate the spectrum.