The Union Cabinet on Wednesday approved guidelines for the next round of spectrum auction which may begin in the last week of January. This marks the beginning of an auctioning process through which telecom spectrum will be assigned to successful bidders for 20 years, enabling them to provide commercial mobile services.

The auction will be for spectrum in 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz frequency bands, an official release said. 

Spectrum will be offered for assignment for validity period of 20 years.

A total of 2251.25 MHz is being offered with total valuation of ₹ 3,92,332.70 crore at reserve price.

By bagging the right to use spectrum through the auction, incumbent telecom service providers will be able to augment their network capacity and new players can start their services.

The spectrum auction is a transparent process of spectrum assignment to successful bidders. Sufficient spectrum availability increases the quality of telecom services for the consumers.

In the auction, bidders will have to comply with parameters/conditions, such as block size in which bidders will be able to submit their bids, spectrum cap (maximum amount of spectrum that can be held by each bidder after the completion of the auction, roll-out obligations, and payment terms, among other things).

According to the guidelines, successful bidders may pay the entire bid amount in one go (upfront) or may exercise an option to pay a certain amount (25 per cent for spectrum won in 700 MHz, 800 MHz, 900 MHz bands or 50 per cent for spectrum won in 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz bands) upfront and remaining amount in a maximum up to 16 equated annual instalments, after a moratorium of two years.

In addition to the bid amount, successful bidders will also have to pay 3 per cent of the Adjusted Gross Revenue (AGR) excluding wireline services as spectrum usage charges for the spectrum won through this auction, as per the guidelines.