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Telecom Firms Submit Rs. 20,435 Crores as Spectrum Auction Earnest Money Deposit

Telecom Firms Submit Rs. 20,435 Crores as Spectrum Auction Earnest Money Deposit

By Press Trust of India | Updated: 18 February 2015 11:22 IST

Eight telecom operators have jointly submitted earnest money deposit of about Rs. 20,435 crores for spectrum auction starting March 4, with Reliance Jio Infocom submitting the highest guarantee.

"The cumulative EMD (earnest money deposit) submitted by eight telecom operators is about Rs. 20,435 crores," an official source told PTI.

Spectrum, or radiowaves, is key part of telecom networks used by companies to provide mobile or wireless services.

The earnest money deposits translate into points that determine the quantum of spectrum blocks a company can bid in the auction process.

Reliance Jio Infocomm has submitted the highest EMD of about Rs. 4,500 crores, followed by Bharti Airtel with Rs. 4,336 crores, Idea Cellular with Rs. 4,000 crores, Vodafone with Rs. 3,700 crores, Tata Teleservices with Rs. 1,500 crores, Reliance Communications with Rs. 1,175 crores, Telewings (Uninor) with Rs. 724.95 crores and Aircel with Rs. 500 crores indicating aggressive bidding in auction rounds, sources said.

These companies, barring Uninor, did not respond to queries sent to them to confirm the amounts.

Uninor in a statement said: "Uninor has filed application expressing its intent to participate in the upcoming spectrum auctions."

The government expects to garner over Rs. 80,000 crores from the sale of radiowaves for providing 2G as well as 3G services, going by the reserve price. Proceeds from this year's auction are expected to help the government meet its fiscal deficit target of 4.1 percent of the GDP.

It has approved the minimum or auction start price for the 2100MHz band or 3G spectrum, which will garner at least Rs. 17,555 crores. The reserve price for auction of 2G spectrum in 800MHz, 900MHz and 1800MHz bands will fetch the government at least Rs. 64,840 crores.

Most of the spectrum being put up for the auction is at present held by Airtel, Vodafone, Idea Cellular and Reliance Telecom. Their licences are expiring in 2015-16.

Idea Cellular's 9 circles, 6 circles of Airtel and 7 circles each of Vodafone and Reliance Telecom are coming up for renewal. These companies have to compulsorily bid for spectrum to continue offering mobile and other telecom services as their permits are expiring.

Entry of RJio, Tata Teleservices, Uninor and Aircel shows that these companies are in the fray for additional spectrum.

The spectrum in 900MHz band frequencies is seen as good for providing telecom services as it gives double the coverage than mobile signal transmitted in 1800MHz band and therefore fewer number of mobile towers.

Most of the licences coming up for renewal hold 900MHz band spectrum which is also scarce in quantity.

The 3G spectrum is the other frequency for which telecom operators are expected to bid aggressively. The government is auctioning only 5MHz of 3G spectrum against industry demand of 20MHz.

Airtel, RCom and Aircel individually hold 3G spectrum in 13 out of 22 telecom service areas; Idea Cellular in 11, Vodafone and Tata Teleservices in 9 circles each.

Industry experts believe that operators will try to win 3G spectrum in service areas where they don't have it to become pan-India 3G operators and reduce dependency on roaming agreement.

As per credit rating firm CRISIL, telecom operators are expected to jointly shell out over Rs. 90,000 crores in the upcoming auction and their debt may rise by about Rs. 70,000 crores after making payment.

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