While most of the base prices are based on the recommendations of the Telecom Regulatory Authority of India (Trai), the Department of Telecom (DoT) has made some changes in the 700 megahertz and 1800 Mhz bands in select circles for the auctions scheduled to start from March 1.
This round of auction will be held for 2,251.25 megahertz (MHz) spectrum in seven frequency bands — 700 Mhz, 800 Mhz, 900 Mhz, 1800 Mhz, 2100 Mhz, 2300 Mhz and 2500 Mhz — at a cumulative base price of Rs 3.92 lakh crore recommended by Trai.
The government has kept frequency bands of 3,300-3,600 MHz, that can be used for 5G services, out of the upcoming auction. These frequencies were part of Trai recommendations for the auction.
The reserve price in the 900 Mhz bands frequencies in Assam, Karnataka and North East have been reduced by more than 50 per cent compared to the amount bidders paid in the spectrum auctions held in 2015.
The DoT has lowered the base price in the 900 Mhz band in 11 circles in the range of 27 to 57 per cent compared to the market discovered price in auctions that were conducted in 2014 and 2015.
The base price of 900 Mhz band spectrum in Delhi has been lowered by around 28 per cent to Rs 585 crore from Rs 811.62 crore per Mhz that was paid by Bharti Airtel, Vodafone and Idea in 2014.
The base price for 900 Mhz band in Karnataka circle has come down to Rs 238 crore per Mhz from Rs 557.5 crore paid by operators in the March 2015 auction, in Kerala to Rs 199 crore from Rs 369.4 crore and Madhya Pradesh Rs 195 crore from Rs 309.5 crore.
Back of the envelope calculation shows that the base price of all 81.4 Mhz paired spectrum in the 900 Mhz band in the upcoming auction is around Rs 9,000 crore lower than the price paid by operators in earlier rounds.
Earlier too the DoT had lowered the reserve price for spectrum in telecom circles where no bids were received.
There were no bidders for 900 Mhz spectrum band in the October 2016 auction for four circles — Bihar, Gujarat, UP East and UP West. The prices in these circles have been slashed in the range of 44 per cent to 72 per cent this time compared to the 2016 base price.
The base price in the 800 Mhz band has been lowered because spectrum in this band remained unsold in 15 of the 19 circles that were put for auction in 2016. Bids were received only for Gujarat, Punjab, Rajasthan and UP East.
According to ICICI Securities, the final reserve price for 800 MHz spectrum in the upcoming auction is 18.5 per cent lower than the October 2016 auction price, which should benefit the relevant operators.
The base prices of spectrum in 1800 Mhz and 2300 Mhz bands have been fixed 14.5 per cent and 17.5 per cent higher than the October 2016 base price, according to ICICI Securities.
The DoT has also increased base price of 700 Mhz in North East and Jammu and Kashmir circles to Rs 34 crore compared to Rs 30 crore recommended by Trai.
“Reserve price for 700 Mhz spectrum is 38 per cent higher than 800 MHz spectrum with prices in three metro circles being 56 per cent higher compared to 800 Mhz spectrum. We thus expect telcos to again give a miss to spectrum in the 700 band,” a Credit Suisse report said.
Market analysts believe the upcoming spectrum auction will get bids in the range of Rs 30,000-Rs 50,000 crore.