In depth analysis: Spectrum auction October 2016

By August 9th, 2016 AT 3:40 PM

As we shared earlier today, the DoT has released the Notice Inviting Applications (NIA), the legally-binding document for the spectrum auctions, outlining full details of how the government plans to sell airwaves to private telecom operators, including the eligibility requirements and the minimum earnest money which operators will have to deposit if they wish to participate in the auctions.

tower-india

The focus of this article is to give an in-depth view and analysis of the NIA in a concise manner for the benefit of our readers who might find it tedious to go through the entire length of the 167 page document. I have tried to highlight all the important aspects, the main one being the availability of spectrum in each band in each telecom circle.

Let us start with an overview of the auction 2016 timetable given in the table below.

Auction timetable

Issue     of     Notice     Inviting

Applications (NIA)

 

8th Aug

 

T=0

Pre-bid ConferenceBy 13th AugT+5
Last      date      for      seeking

clarifications on NIA

 

19th Aug

 

T+11

Clarifications to NIA29th AugT+21
Last  date  for  submission  of

Applications

 

14th Sept

 

T+36

Publication      of      Ownership

details of Applicants

 

15th Sept

 

T+37

Bidder  Ownership  Compliance

Certificate

 

16th Sept

 

T+39

Pre-qualification of Bidders19th SeptT+42
Last   date   of   withdrawal   of

applications

 

22nd Sept

 

T+45

Final List of bidders23rd SeptT+46
Mock Auction26th & 27th SeptT+49
Start of the Auction1st OctT+52
 

Payment of the Successful Bid

Amount

Within 10 calendar

days of the issue of demand note

Venue and Date/ time of Pre Bid meeting will be notified on DoT

website separately

The mega spectrum auction is designed to put on sale a total of 2354.55 MHz of spectrum ranging across the 7 bands of 700 MHz, 850 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz. Let us consider the circle wise availability of spectrum in each of these bands in the upcoming auction.

700 MHz:

This is the first time that spectrum in this band is being auctioned in India. This corresponds to Band 28 and is useful for 4G FD-LTE deployment. The good indoor coverage offered by the better penetrative power of these airwaves is what makes it the most sought after band, but the lack of a mature device ecosystem coupled with high reserve price may lead to limited interest by the operators. The DoT has put up 35 MHz of paired spectrum in this band for sale in each of the 22 circles as 7 blocks of 5 MHz each. The details are given in the table below.

700 MHz Band

Block Size:5MHz (paired)
Name of

Telecom Circle

/ Metro LSA

Quantum

on sale

(MHz) (paired)

No of

Blocks

Reserve

Price per

MHz

(Rs Cr)

Reserve

Price per

Block

(Rs Cr)

EMD/

Block

(Rs Cr)

Eligibility

Points/

Block

Andhra Pradesh35797148554803105
Assam35715879060291
Bihar3572481240120641
Delhi357159579754803105
Gujarat35795247604803105
Haryana357186930120641
Himachal

Pradesh

 

35

 

7

 

64

 

320

 

30

 

132

Jammu &

Kashmir

 

35

 

7

 

52

 

260

 

30

 

132

Karnataka35774037004803105
Kerala35733416702401411
Kolkata35759629802401411
Madhya

Pradesh

 

35

 

7

 

331

 

1655

 

240

 

1411

Maharashtra357127263604803105
Mumbai357119259604803105
North East3574422030132
Odisha35715276060291
Punjab35730815402401411
Rajasthan35736418202401411
Tamil Nadu35790045004803105
Uttar Pradesh

(East)

 

35

 

7

 

459

 

2295

 

240

 

1411

Uttar Pradesh

(West)

 

35

 

7

 

384

 

1920

 

240

 

1411

West Bengal357183915120641

 

850 MHz:

This corresponds to band 5 which had traditionally been used for CDMA services in India but is now being refarmed to use for 4G FD-LTE. This offers similar indoor coverage like 700 MHz but has a more mature device ecosystem and lower reserve price, which is why it may see more bidders than 700 MHz band. The DoT has put up a cumulative total of 73.75 MHz of paired spectrum in this band across 19 circles in a block size of 1.25 MHz each. The details are given in the table below.

850 MHz Band

Block Size: 1.25MHz (paired)
Name of

Telecom Circle / Metro LSA

Quantum on sale (MHz) (paired)No of

Blocks

Reserve Price per MHz

(Rs Cr)

Reserve Price per Block

(Rs Cr)

EMD/ Block (RsCr)Eligibility Points/ Block
Andhra

Pradesh

7.56606757.560291
Bihar2.521361701560
Delhi2.528481060120641
Gujarat6.255285356.2560291
Haryana1.2515771.257.527
Himachal

Pradesh

3.7532430310
Karnataka2.52303378.7560291
Kerala2.52243303.7530132
Kolkata2.5216020030132
Madhya

Pradesh

2.5240851060291
Maharashtra7.56799998.75120641
Mumbai54727908.75120641
Odisha3.7535771.257.527
Punjab6.255119148.751560
Rajasthan7.5620425530132
Tamil

Nadu

2.5236045060291
Uttar

Pradesh

(East)

3.753219273.7530132
Uttar

Pradesh

(West)

2.52182227.530132
West

Bengal

1.25182102.51560

 

900 MHz:

This corresponds to band 8 and is used for GSM as well as 3G HSPA services. The 2015 auction saw the major sale of spectrum in this band as operators’ licenses came up for renewal. This time there isn’t much fresh spectrum in this band as no licenses are expiring and whatever is being put up for sale is what remained unsold from the last auction. A cumulative total of 9.4 MHz paired spectrum has been put up for sale across 4 circles in block sizes of 0.2 MHz each. The details are given in the table below.

900 MHz Band

Block Size: 0.2 MHz (paired)
Name of

Telecom

Circle / Metro

LSA

Quantum

on sale (MHz) (paired)

No of

Blocks

Reserve

Price Per MHz

(Rs Cr)

Reserve

Price per Block

(Rs Cr)

EMD/

Block

(Rs Cr)

Eligibility

Points/ Block

Bihar4.62344488.81560
Gujarat315673134.61560
Uttar Pradesh

(East)

0.63776155.21560
Uttar Pradesh

(West)

1.26739147.81560

 

1800 MHz:

This is the star spectrum of this auction and corresponds to band 3. A large amount of spectrum in this band has become available due to the harmonisation activity that DoT undertook with the Defence ministry freeing up over 200 MHz. This band is usable for GSM as well as 4G FD-LTE services. Due to the large device ecosystem supporting band 3 LTE and the low cost of contiguous spectrum, this band has chances of seeing very good demand in the upcoming auction. A cumulative total of 219.6 MHz paired spectrum has been put up for sale across 21 circles in block sizes of 0.2 MHz each. The details are given in the table below.

1800 MHz Band

Block Size: 0.2MHz(paired)
Name of

Telecom Circle

/ Metro LSA

Quantum

on sale (MHz) (paired)

No of

Blocks

Reserve

Price per MHz

(Rs Cr)

Reserve

Price per

Block

(Rs Cr)

EMD/

Block

(Rs Cr)

Eligibility

Points/ Block

Andhra Pradesh4.42224348.67.527
Assam189040813
Bihar12.2616212.4310
Delhi12.86439979.87.527
Gujarat136523847.67.527
Haryana7.437479.413
Himachal

Pradesh

11.457163.20.51
Jammu &

Kashmir

32160132.60.51
Karnataka4.221185377.527
Kerala2108316.6310
Kolkata42014929.8310
Madhya

Pradesh

4.6238316.6310
Maharashtra13.46731863.67.527
Mumbai4.82429859.67.527
North East9.246112.20.51
Odisha1.47387.613
Punjab15.4777715.4310
Rajasthan11559118.2310
Uttar Pradesh

(East)

5.42711523310
Uttar Pradesh

(West)

14.6739619.2310
West Bengal18.492469.213

 

2100 MHz:

This corresponds to band 1 and has only been used for 3G HSPA services in India though it can also be used for 4G FD-LTE services in the future. This is the first time that abundant amount of spectrum in this band has been put up for auction, thanks to the spectrum swap deal signed between the DoT and Defence ministry which released 15 MHz Pan India spectrum. Since none of the major operators has a Pan India 3G footprint, this band may see good uptake in upcoming auction. 15 to 20 MHz of paired spectrum in this band has been put up for sale in all 22 circles in block sizes of 5 MHz each. The details are given in the table below.

2100 MHz Band

Block Size: 5 MHz (paired)
Name of

Telecom

Circle / Metro

LSA

Quantum

on sale (MHz) (paired)

No of

Blocks

Reserve

Price per MHz

(Rs Cr)

Reserve

Price per Block

(Rs Cr)

EMD/

Block

(Rs Cr)

Eligibility

Points/ Block

Andhra

Pradesh

2042721360120641
Assam1534623030132
Bihar2048643060291
Delhi20455427702401411
Gujarat1532581290120641
Haryana1535527530132
Himachal

Pradesh

204201001560
Jammu &

Kashmir

15311557.527
Karnataka15332816402401411
Kerala153177885120641
Kolkata15311658060291
Madhya

Pradesh

15312361560291
Maharashtra15334117052401411
Mumbai20446123052401411
North East15312607.527
Odisha2043819030132
Punjab1539145560291
Rajasthan15314070060291
Tamil Nadu15334417202401411
Uttar Pradesh

(East)

15311055060291
Uttar Pradesh

(West)

15311155560291
West Bengal1535226030132

 

2300 MHz:

This corresponds to band 40 and is used for 4G TD-LTE deployment in India. This band now has a very good device ecosystem in India and is desirable since large chunks of unpaired spectrum are available for much lower price than the sub 1 GHz bands. This is a capacity band which is used by operators to add bandwidth to their data services. 20 MHz unpaired spectrum in two blocks of 10 MHz each is available across 16 circles in the upcoming auction. The details are given in the table below.

2300 MHz Band

Block Size: 10 MHz unpaired
Name of

Telecom Circle / Metro LSA

Quantum

on sale (MHz) (unpaired)

No of

Blocks of

10MHz

(unpaired)

Reserve

Price per MHz

(Rs Cr)

Reserve

Price per

Block

(Rs Cr)

EMD/

Block

(Rs Cr)

Eligibility

Points/ Block

Andhra

Pradesh

2026868060291
Assam202220310
Bihar2026607.527
Delhi2021431430120641
Gujarat2023939060291
Himachal

Pradesh

20211013
Karnataka20298980120641
Kerala202161601560
Kolkata2023333030132
Madhya

Pradesh

2028807.527
Maharashtra2025858060291
Mumbai2021461460120641
North East20211013
Odisha2024407.527
Tamil Nadu2021321320120641
West Bengal2025507.527

 

2500 MHz:

This corresponds to band 41 and just like band 40 this is also a capacity band used by operators to add to their bandwidth. As of now only one PSU operator holds spectrum in this band in 14 circles and it has denied participation in the upcoming auctions so it is unclear if this band will see any bidding at all, given its poorly developed device ecosystem and poor indoor coverage. 20 to 40 MHz of unpaired spectrum in blocks of 10 MHz each has been put up for sale in each of the 22 circles in the upcoming auction. The details are given in the table below.

2500 MHz Band

Block Size: 10 MHz unpaired
Name of

Telecom Circle / Metro LSA

Quantum

on sale (MHz) (unpaired)

No of

Blocks

Reserve

Price per MHz

(Rs Cr)

Reserve

Price per

Block

(Rs Cr)

EMD/

Block

(Rs Cr)

Eligibility

Points/ Block

Andhra

Pradesh

4046868060291
Assam202220310
Bihar2026607.527
Delhi4041431430120641
Gujarat4043939060291
Haryana2028807.527
Himachal

Pradesh

20211013
Jammu & Kashmir20211013
Karnataka40498980120641
Kerala202161601560
Kolkata4043333030132
Madhya

Pradesh

2028807.527
Maharashtra4045858060291
Mumbai4041461460120641
North East20211013
Odisha2024407.527
Punjab2022121030132
Rajasthan2026607.527
Tamil Nadu4041321320120641
Uttar Pradesh

(East)

2029901560
Uttar Pradesh

(West)

202121201560
West Bengal2025507.527

Each operator will also have to keep in mind the spectrum holding caps which dictate that an operator cannot hold more than 50% of the total spectrum available in any band in a circle and 25% of the cumulative spectrum across all frequency bands in a circle. The circle wise per band and total spectrum holding cap for operators is given in the table below. Also for the details on the amount of spectrum each operator currently holds in each band in each circle you can refer to our Pan India 2016 spectrum holding chart.

Band –wise spectrum holding Cap & Overall spectrum holding Cap for each LSA
Paired Spectrum (Total Spectrum Assigned for both sides of spectrum is taken into account)Unpaired

Spectrum

Overall Cap on Bidding for each Operator for each LSA.

Total Spectrum Assigned for unpaired and both sides of spectrum in case of paired spectrum is taken into account Overall Cap for each Operator (in MHz)

700

MHz

850

MHz

900

MHz

1800

MHz

2100

MHz

2300

MHz

2500

MHz

 

 

 

 

Name of Telecom Circle / Metro LSA

 

Cap on bidding for each Operator for each LSA in respective band.

 

 

 

 

 

 

Band -wise Cap for each Operator (in MHz)

Andhra

Pradesh

35.0017.5020.2054.8040.0030.0020.00108.75
Assam35.0015.0018.6054.8040.0030.0020.00105.45
Bihar35.0018.7518.6054.8040.0030.0020.00108.58
Delhi35.0017.5022.2054.8040.0030.0020.00109.75
Gujarat35.0017.5020.2054.8040.0030.0020.00108.75
Haryana35.0017.5018.4054.8040.0020.0020.00102.85
Himachal

Pradesh

35.0017.5018.6054.8040.0030.0020.00107.95
Jammu &

Kashmir

35.0012.5018.6054.8040.0020.0020.00100.45
Karnataka35.0017.5020.0054.8040.0030.0020.00108.65
Kerala35.0017.5018.6054.8040.0030.0020.00107.95
Kolkata35.0017.5020.2054.8040.0030.0020.00108.75
Madhya

Pradesh

35.0017.5018.6054.8040.0030.0020.00107.95
Maharashtra35.0017.5020.2054.8040.0030.0020.00108.75
Mumbai35.0017.5022.2054.8040.0030.0020.00109.75
North East35.0015.0019.4054.8040.0030.0020.00105.85
Orissa35.0017.5018.6054.8040.0030.0020.00107.95
Punjab35.0017.5021.8054.8040.0020.0020.00104.55
Rajasthan35.0017.5018.6054.8040.0020.0020.00102.95
Tamil Nadu35.0017.5020.2059.4040.0030.0020.00111.05
Utter

Pradesh

(East)

35.0017.5018.6054.8040.0020.0020.00102.95
Utter

Pradesh

(West)

35.0017.5018.6054.8040.0020.0020.00102.95
West Bengal35.0015.0019.4054.8040.0030.0020.00107.10

 

In the NIA, for the first time, the government has also promised to assign spectrum within 30 days of making an upfront payment by successful bidders, compared with four-five months earlier. While telecom operators winning spectrum in 700MHz, 800MHz and 900 MHz bands will have to pay at least 25% of the bid amount within 10 days of the conclusion of the auctions. The rest will have to be paid in 10 annual instalments after a two-year moratorium. For 1800 Mhz, 2100 MHz, 2300 Mhz and 2500 Mhz at least 50% of the bid amount will have to be paid upfront.

Unlike previous auction, this time Government has reduced the interest on instalments to 9.3 per cent from about 10 per cent. The lock-in period of spectrum holding by an operator before he can trade or share it is now one year from the date of spectrum allotment instead of two years in previous auction. This move will smoothen the process of consolidation. The government has fixed 3% of annual revenue as usage charge for spectrum acquired in the upcoming auction; for existing spectrum, a weighted average spectrum usage charge (SUC) has been fixed, with a floor price of 3%.

In our next article we present to you our predictions about participation by operators in the upcoming auction and which spectrum band they are most likely to bid for in which licensed service area (circle). Till then keep reading TelecomTalk and also express your views and opinions through the comments section below.

Esmail is our very own in-house spectrum specialist. He is passionate about Telecom, DTH and OTT video streaming apps. When not writing an article, you can find him binge watching shows on Netflix while sipping on a cup of coffee.

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