The Telegraph
Saturday , January 4 , 2014
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Spectrum rule tweak

New Delhi, Dec. 3: The government has reworked the rules for spectrum auction — to be held next month — in the wake of clarifications sought by potential bidders.

The department of telecom (DoT) has increased the reserve price in case of over-bidding. It clarified that telecom operators such as Uninor, Videocon and Sistema Shyam Teleservices — which had won spectrum in November 2012 and March 2013 — would not have to submit performance bank guarantee again.

Earlier rules suggested that existing licensees would have to give a bank guarantee of Rs 21 crore for a six-year period.

Operators pointed out that they had already provided in upfront bank guarantees, which could be used as performance guarantees for future purchases.

The clarifications come in the wake of around 276 queries raised by potential bidders at a meeting held earlier.

The DoT stated that in case of over-bidding, the reserve price would be raised 1 per cent for “excess demand” of every additional megahertz bid by companies beyond the amount put up for auction.

In the earlier auctions, the increase in base price was linked to over-bidding for every 1.25MHz spectrum.

For instance, if 5MHz is put up for auction and the total number of bids for various slots of spectrum add up to more than 6MHz, the reserve price will be raised by 1 per cent.

About 403MHz of 2G spectrum in the 1800MHz band and about 45MHz in the premium 900MHz band have been put on the block.

The government expects to raise about Rs 11,300 crore from the auction to be held in the first week of February. It hopes to garner about Rs 40,874.50 crore during 2013-14 from spectrum sale, one-time charge and annual regular licence fee.

The telecom department said companies could not mortgage radio waves to raise funds but added that it would modify a tripartite agreement (TPA) that would allow them to take loans from banks.

In the November 2012 and March 2013 auctions, the agreements had allowed companies to raise cash by mortgaging spectrum.