After the Cabinet gave its approval to the 5G spectrum auction, the Department of Telecommunications (DoT) on Wednesday (15 June) issued the Notice Inviting Applications (NIA) in a bid to facilitate roll-out of 5G services in the country.
The PM Modi-led Cabinet had earlier on Wednesday cleared DoT’s proposal to conduct spectrum auction through which spectrum will be assigned to the successful bidders for providing 5G services to public and enterprises.
A total of 72097.85 MHz of spectrum with a validity period of 20 years will be put to auction to be held by the end of July, 2022. The auction will be held for spectrum in various Low (600 MHz, 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz), Mid (3300 MHz) and High (26 GHz) frequency bands.
It is expected that the Mid and High band spectrum will be utilised by Telecom Service Providers to roll-out of 5G technology-based services capable of providing speed and capacities which would be about 10 times higher than what is possible through the current 4G services.
The highlights of the proposed spectrum auction include:
- Technology: Spectrum allotted through this auction can be used for 5G (IMT-2020) or any other technology within the scope of Access Service License.
- Process of auction: The auction shall be a Simultaneous Multiple Round Ascending (SMRA) e-auction.
- Payment: Successful bidders will be allowed to make payment in 20 equal annual instalments, duly protecting the NPV at the interest rate of 7.2 per cent.
- Surrender of spectrum: Spectrum acquired through this auction can be surrendered after a minimum period of ten years.
- Spectrum Usage Charge: There will be no Spectrum Usage Charges (SUC) for spectrum acquired in this auction.
- Bank Guarantees: The requirement for a successful bidder to submit a Financial Bank Guarantee (FBG) and Performance Bank Guarantee (PBG) has been dispensed with.
- Captive Non-Public Network: Licensees can set up isolated captive non-public network(s) for industries using the spectrum acquired through this auction.
Following the Cabinet nod, the DoT issued the NIA for the spectrum auction.
In the NIA, the DoT has set a net worth eligibility for bidders at Rs 100 Crore per License Service Area (LSA) with the exception being Jammu and Kashmir and North East Service Areas where net worth requirement is Rs 50 crore.
Further, there is a lock-in period of 1 year from the date defined in the NIA for equity of a person whose share capital is 10 per cent or more in the bidding entity on the date of submission of application and whose net worth has been taken into consideration for determining the eligibility for bidding for spectrum.
Lock-in condition for promoters’ equity will be applicable as per the NIA, if the existing licensee uses promoters’ net worth for gaining eligibility to bid in a band, where it does not hold spectrum. This is applicable to holders of expiring licenses as well. Lock-in will apply to the entire holding of promoter in the company.
However, this condition of net worth requirement will be applicable on new entrants only in those LSAs where they do not hold any spectrum in any of the bands (i.e., any of the 800/900/1800/2100/2300/2500 MHz bands).