India’s Telecom Spectrum Auction: Predictable Frequency

Source: The post India’s Telecom Spectrum Auction has been created, based on the article “Predictable frequency: Annual spectrum auction will help telcos” published in “Business Standard” on 13th March 2024.

UPSC Syllabus Topic: GS Paper 3 – Indian Economy – Mobilization of Resources

News: The Indian government is organizing a telecom spectrum auction on May 20. They will sell many frequency bands for telecom companies to use. This frequent auction process helps companies avoid overspending and plan better financially. It includes options for both Indian and foreign companies. India’s Telecom Spectrum Auction 

What is the Upcoming India’s Telecom Spectrum Auction?

Date and Scope: The Indian government plans to hold a telecom spectrum auction on May 20, selling various frequency bands previously unsold in 2022.

Frequency Bands: The auction includes eight bands: 800, 900, 1800, 2100, 2300, 2500, 3300 MHz, and 26 GHz. Notably, the 700 MHz band is excluded.

Reserve Price: The total reserve price for the bands is close to ₹1 trillion.

Previous Auctions: In contrast, the 2022 5G auction involved a higher spend of ₹1.5 trillion by telecom companies.

Foreign Entity Participation: Foreign entities can directly participate in the auction. They can apply for a license through an Indian company and are allowed to own a 100% stake under the automatic route for foreign direct investment.

Requirements for New Telecom Entrants: New entrants in the telecom sector, who don’t currently hold spectrum, need to demonstrate a net worth of ₹100 crore per license area. In specific regions like Jammu & Kashmir and the Northeast, the requirement is ₹250 crore.

What are the impacts of Upcoming India’s Telecom Spectrum Auction?

Reduced Financial Pressure on Telecom Companies: Annual auctions prevent companies from hastily buying spectrum at high costs, improving their financial management.

Strategic Purchases: Companies can now selectively buy frequencies that align with their current needs.

Focus on Expiring Frequencies: Most companies will prioritize refilling airwaves with frequencies close to their expiry dates.

Access for New and Foreign Players: The auction allows new entrants and foreign entities to participate, fostering competition and diversity in the telecom sector.

Way forward

To advance telecom in India, frequent spectrum auctions should continue, enabling strategic investments by companies. The government should also expedite satellite service airwaves allocation to broaden the sector’s service scope. Including the high-value 700 MHz band in future auctions could also be beneficial.

Question for practice:

Evaluate the potential impacts of the upcoming telecom spectrum auction in India