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Times Internet To Conduct India’s 2G Auction; Money

Times Internet Limited* (Indiatimes) has been selected as the auctioneer to operate India’s 2G spectrum auction process by Department of Telecommunications (DoT).Following a Supreme Court verdict which led to the cancellation of 122 telecom licenses, and the direction given to the Indian government to hold auctions for spectrum allocation, the government is scheduled to hold the auction this year, for spectrum in the 1800 MHz and 800 MHz bands. The e-auction will entail inviting applications, resolving queries of potential bidders, finalizing eligible bidders, public information sessions and mock auction.

Indiatimes was competing against NCDEX Spot Exchange and Karnataka State Electronics Development Corporation, who were declared (.pdf) as an eligible bidders for the e-auction spectrum. However, the two firms could not qualify for the technical bids.

How Much Money Could Times Internet Make?

As per the RFP for the auction, the Government of India, Ministry of Communications and IT, proposes to pay the auction winner, in this case, Times Internet Limited, according to the following terms:

– Rs. 5 crore for both 1800MHz and 800MHz bands combined. Or a pro-rated fee of Rs. 1136363.63 per service area.
– Fee as percentage of the difference between the winning bid and the reserve price.

That is,

The reserve price has been set for Rs 14,000 crores (around $2.5 billion) for 5 MHz pan India in 1800 MHz Band, and Rs 18,200 crore ( around$3.2 billion) in the 800 MHz band. The amount of money Indiatimes earns will be depend on the number of slots of 5MHz of spectrum being sold in each service area, and the bid being made for it.

Drop Dead Fee

The Indian Government has also declared a drop dead fee of Rs. 2.5 lakh per service area to be paid to the auctioneer (TIL) if the government doesn’t find the winning bids acceptable or backs out at any stage, or the winner fails to pay for the spectrum. If the government abandons the auction altogether, the drop dead fee is limited to Rs. 10 lakh.

Disclosure: Indiatimes is an advertiser with MediaNama

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