Telecom department eyes reverse auction to meet fiscal needs

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The Department of Telecommunications (DoT) is contemplating a reverse auction mannequin to be sure that the federal government is ready to elevate well timed cash from sale of bandwidth for assembly fiscal needs with out additional including to the monetary stress of cell phone operators.

“The industry is divided; some operators want airwaves at current price, rest want it either at a reduced price or don’t want an auction right now,” a senior DoT official advised ET.

“Under the reverse auction model, one could put up all bands for auctions. The bandwidth which doesn’t elicit any response will automatically see a cut, say of 10% in the reserve price. This can once again be repeated till we hit a floor cap, say of 25% below the reserve price, after which we pull the particular bandwidth out of the auction and continue to sell the rest,” the official added.

As reported earlier by ET, new entrant Reliance Jio Infocomm has backed an auction of each 4G and 5G airwaves within the present fiscal 12 months on the costs really helpful by the sector regulator, Telecom Regulatory Authority of India. Second largest telco Bharti Airtel, nevertheless, is eager on a sale of solely 4G airwaves within the present fiscal 12 months and has sought a discount within the worth of sub 1GH bands.

Market chief Vodafone Idea doesn’t need auctions until 2020. Its chairman, Kumar Mangalam Birla, has just lately advised prime finance and Telecom ministry officers that the extreme liquidity crunch it was going through could power the telco to default on a Rs 900 crore spectrum-related cost it should pay the federal government in March.

This has nudged the federal government to take into account some reduction measures for the sector at giant, with Telecom and finance ministry officers having mentioned Birla’s proposals that the interval of cost for spectrum purchases be elevated to 18 years from the present 16, extending the two-year moratorium to three, moreover spreading the cost of Vodafone Idea’s Rs 900 crore into 12 instalments.

Birla additionally flagged excessive levies within the Telecom sector — practically a 3rd of a telco’s income goes to the federal government within the type of totally different levies — and the latest hike in import responsibility of Telecom gear other than the Rs 30,000 crore that’s locked up on account of GST cost below the ‘reverse cost mechanism’.

“The way out of such a problem is to not only ease the stress on the sector but to also ensure it grows which will help to revive the sector faster. Thus, the auctions must be designed keeping these points in mind,” the senior official mentioned. Further, DoT feels that auctions ought to be made an annual occasion, with the federal government placing up on the market no matter bandwidth it has.

“See, all players want different things, we want to ensure that we sell bandwidth on time and of course at prices which are not exorbitant for the sector, and that is why we are now considering the reverse auction model,” the official mentioned, including that the petroleum ministry is at present following the mannequin.

“This way, we don’t lose value of the precious spectrum lying with us and whosoever wishes to buy or needs more bandwidth can buy. If any bandwidth fails to generate demand after it hits the floor price also, then we put it up for auction next year,” the official added.

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