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2014 2G Auctions: 5% Spectrum Usage Fee For New Spectrum; Pre-Qualified Bidders

Our coverage of the 2G Auctions is brought to you by OnMobile Global, India’s leading Mobile Value Added Services [VAS] company

In a possible bid to increase participation for the forthcoming 2G spectrum auction, the empowered group of ministers (EGoM) has reduced the spectrum usage charges to a fixed 5% of the telco’s annual gross revenues on all the new spectrum sold during the auction, Telecom minister Kapil Sibal has told PTI (via The Hindu Business Line). This decision is now awaiting a final approval from the Union Cabinet.

Earlier, telcos were charged between 3% to 8% of the gross revenues based on the amount of spectrum held by the operators. However, as per the new rates, telcos now have to pay a weighted average of their existing spectrum usage charge and a fixed 5% usage charge for the new spectrum.


1% SUC for BWA players

The spectrum usage charge for operators with broadband wireless access (BWA) spectrum remains at 1% of their annual gross revenues, although they will have to pay a usage charge of 5% for the new spectrum acquired during the spectrum auction next week.

Cellular Operators’ Association of India (COAI) Director-General Rajan Mathews however has expressed concerns on this, saying that 4G players should also pay the same usage charge as GSM operators, especially now that Reliance Jio has received pan-India unified license through which it can offer voice services to its consumers, thereby creating an unlevel playing field.

List Of Pre-Qualified Bidders

The Department of Telecommunications (DoT) has also released (pdf) a list of pre-qualified bidders for the 2G spectrum auctions in 1800MHz band and the 900MHz band happening next week. Note that today is the last day for telcos to withdraw their respective bids from the auction and DoT will release the final list of bidders tomorrow. Among the pre-qualified bidders include:

Vodafone India: Eligible to bid in 15 service areas in the country. It has opted out of seven circles – Assam, Bihar, Himachal Pradesh, Jammu & Kashmir, Madhya Pradesh, North East, Orissa. Note that Vodafone had acquired spectrum in these areas during the November 2012 auctions. Also worth noting is that Vodafone owns spectrum in these seven areas through its subsidiary Vodafone Spacetel Ltd.

Reliance Communications: Eligible to bid in 14 service areas in the country. It has opted out of eight circles – Assam, Bihar, Himachal Pradesh, Kolkata, Madhya Pradesh, North East, Orissa and West Bengal. Its worth noting that RCOM has overlapping licenses with its subsidiary Reliance Telecom Limited in these areas.

Tata Teleservices: Eligible to bid in 21 service areas in the country. It has opted out of the Delhi circle.

Bharti Airtel, Idea Cellular, Reliance Jio Infocomm, Telewings Communications: Eligible to bid in all 22 service areas in the country.

Our 2G Auctions 2014 coverage

2014 2G Auctions: 8 Telcos Submit Bids; Videocon, Loop & SSTL Not Participating
DoT Modifies 2014 2G Auction Guidelines: Rollout Obligations, Performance Guarantees
India’s 2014 2G Auction Postponed: To Begin On 3rd February 2014
The Lowdown: DoT’s Guidelines For 2G Spectrum Auction In January 2014

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