More reports on: Government policies

Spectrum auction will not lead to prices soaring: Prasad

27 March 2015

Minister of information technology and communications Ravi Shankar Prasad on Thursday termed the auction of telecom spectrum, which concluded on Wednesday, the ''most successful'' in India's telecom history, fetching the government Rs1.1 lakh crore.

He added that contrary to perception, the auction wouldn't lead to a substantial rise in mobile charges.

"I am seeing a huge campaign that mobile rates will go up. A person very familiar with the telecom sector has given me an analysis. The spectrum will be with operators for 20 years. According to the analysis, the annual load on telecom operators will be about Rs5,300 crore ... and (it will lead to a rise of) 1.3 paise per minute for a call,'' Prasad said.

He also announced the details of the auction, following the Supreme Court on Thursday allowing the government to finalise the spectrum auction bids and collect the initial payment, worth Rs28,872.77 crore, by 31 March.

The court, however, said the final allocation would be subject to the decision of the court after hearing all parties.

''I very earnestly appeal to the companies to pay before 31 March; national revenue is equally important for growth and India's image,'' he said after announcing the auction results on Thursday.

According to norms, winning bidders will get 10 days to make the initial payments, which account for about a third of the total bid amount. But with the new financial year looming, the government is anxious to collect the payment before it is due and shore up its budget deficit.

''My department was particularly singled out for 2,100 MHz that you ought to have taken 15 MHz additional. I was criticised for that. We have offered 85 MHz in the 2,100-MHz band, of which 15 MHz in three places remained unsold. Therefore, we were right,'' Prasad added.

Top 3 bidders garner 80% spectrum

In the auction, India's top three mobile operators - Bharti Airtel, Vodafone India and Idea Cellular - have together acquired about 80 per cent of the spectrum. The three have committed a cumulative Rs85,396.92 crore, or 77.72 per cent of the government's total income of Rs1,09,874.91 crore, from the latest round of auction, which concluded on Wednesday.

A total of 22 licences of these three operators are due for renewal in 2015-16. These operators have spent most of their money in acquiring spectrum in the 900-MHz band, to regain spectrum in circles where their licences are to expire, according to data released by the Department of Telecommunications (DoT).

Aditya Birla Group firm Idea Cellular, India's third-largest mobile operator, emerged as the most aggressive bidder, with a total commitment of Rs30,306.98 crore. Nine licences of Idea Cellular are to expire in 2015-16 (See: Idea Cellular commits the highest in spectrum auction).

Bharti Airtel was the second-largest bidder in the auction, with an overall bid amount of Rs29,130.20 crore, followed by Vodafone India at Rs25,959.74 crore. Licences of Bharti Airtel are up for renewal in six circles and Vodafone in seven.

Gopal Vittal, managing director and chief executive (India & South Asia), Bharti Airtel, said, ''We have secured a 20-year road map and have a strong platform to lead the 'Digital India' story. However, the auction design and the scarcity of spectrum have resulted in exorbitant bids to secure the spectrum, particularly in renewal circles, where huge investments have already been made on the assurance of a continuity of business enshrined in the licenses issued by the DoT. We hope in future auctions, the government makes available adequate spectrum by securing it from agencies and operators that are underutilising this vital resource.''

He added the company would offer 3G and 4G services across the country after it got fresh spectrum.

The Mukesh Ambani-run Reliance Jio Infocomm has bought spectrum in the 800-MHz and 1,800-MHz bands for Rs 10,077.53 crore, which is likely to help the company's proposed 4G network for data and voice services.

Mukesh Ambani, chief of Reliance Industries, said, ''Jio's seamless 4G services using proven multi-band LTE technology and supported by our large spectrum footprint will provide superior user experience for voice, video and data services, in line with the best service providers in the world.''

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