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DoT Modifies 2014 2G Auction Guidelines: Rollout Obligations, Performance Guarantees

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

The Department of Telecommunications (DoT) has issued (pdf) an amendment, modifying several terms in the notice inviting applicants for the 2G spectrum auction happening next month. The changes include:

1. Rollout obligations:

– District headquarters: cover at least 10% of the district headquarters or towns by the first year from spectrum allotment date and at least 50% of district headquarters or towns by the end of three years from spectrum allotment date.
– Block headquarters: cover in at least 10% of the block headquarters of the licensed service area by the end of three years and subsequently increase it to 20% and 30% in the fourth and fifth year respectively.
– Metro: 90% of the metro service areas within the first year from spectrum allotment date.

The change in the terms: that licensees who had won spectrum in the November 2012 auctions and those whose licenses has already been amended to include roll-out obligations as mentioned above, will need not undertake this additional roll-out obligation other than what has already been specified as per the amendment issued in June 2013 to their licensees.

2. LTE Bidders Need Not Provide Technology Details: Successful bidders who intend to deploy LTE technology no longer have to provide details of the proposed technology to be deployed. Previously, DoT had mentioned that if bidders are deploying a technology besides GSM/CDMA/WCDMA, they should provide details of the proposed technology to be deployed within one month of obtaining the license.

3. Net Worth Definition: The net worth for new entrants has been defined as the sum total of paid up equity capital, free reserves and surplus net of accumulated losses. DoT had previously mentioned that new entrants should have a net worth of Rs 100 crore for each service area besides Jammu & Kashmir and North East areas where the net worth should be Rs 50 crore.

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4. Performance Bank Guarantees: Licensees who have already submitted the bank guarantees in the November 2012 and March 2013 auctions need not pay any additional bank guarantees. DoT mentions that the performance bank guarantees has been submitted only once – either Rs 21 crore per service area as existing licensees or Rs 35 crore per service area as new entrant.

Earlier in the month, DoT had postponed the date of the 2014 2G spectrum auctions in India to February 3, 2014. Around 403.2 MHz of spectrum in the 1800MHz band and 46 MHz in the 900MHz band is being put up on sale for the auction and the government hopes to raise Rs 48,000 crore from these auctions if it is all sold at the approved reserve price.

However, note that both the previous 2G spectrum auctions have largely been unsuccessful. While there were no takers for 1800MHz band and 900MHz band in the March 2013 auctions, DoT sold a little more than a third of the spectrum offered in November 2012 auctions.

Our 2G Auctions 2014 coverage
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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