New Delhi: Indian telecom sector is poised for a major leap as the decks have been cleared for auctioning of spectrum. Telecom sector today is a key infrastructure provider with strong linkages with economic growth, direct and indirect employment generation and expansion of Digital India and hence the decision to auction spectrum will have a salutary impact on all aspects of the telecom sector.

The Union Cabinet, chaired by Prime Minister Narendra Modi, on December 16 approved the proposal of the Department of Telecommunications to conduct spectrum auction through which spectrum will be assigned to the successful bidders for providing commercial mobile services.

The auction will be for spectrum in 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz frequency bands. Spectrum will be offered for assignment for validity period of 20 years. A total of 2251.25 MHz is being offered with total valuation of Rs 3,92,332.70 crore at reserve price.

By winning right to use spectrum through the auction, incumbent telecom service providers will be able to augment their network capacity whereas new players will be able to start their services. In the auction, bidders will have to comply with parameters and conditions, that is, block size in which bidders will be able to submit their bids, spectrum cap, that is, the maximum amount of spectrum that can be held by each bidder after the completion of the auction, roll-out obligations, payment terms etc.

The successful bidders may pay entire bid amount in one go (upfront) or may exercise an option to pay a certain amount (25 per cent for spectrum won in 700 MHz, 800 MHz, 900 MHz bands or 50% for spectrum won in 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz bands) upfront and remaining amount in a maximum up to 16 equated annual installments after a moratorium of two years.

Key POINTS

* Six-fold increase in the government spending on telecommunications infrastructure and services in the country – from Rs 9,900 crores between 2009-14, to Rs 60,000 crores (actual and planned) between 2014-19

* Increase in overall teledensity in the country – from 75 per cent in June 2014 to 93 per cent in March 2018, adding 305 million new subscribers.

* Highest mobile data consumption globally at 3.4 billion GB per month.

* Digital payment transactions through mobile grew four times – from 168 million in November 2016 to 600 million now.

* Five times jump in FDI inflows in telecom Sector – from USD 1.3 billion in 2015-16, to USD 6.2 billion in 2017-18.

* Digital communications sector to grow to 8 per cent of India’s GDP by 2022 from 6 per cent currently.