There is a fiscal bonanza akin to the 3G spectrum sale lined up for the government, if it follows its preferred path to auction. The telecom regulator sees 20 years of high government revenues based on its recommendations in the wake of the 2G spectrum scandal.
The government stands to earn about Rs. 692,000 core through auction of spectrum in the 1800, 900 and 800 MHz bands, TRAI chairman Rahul Khullar has said in a report submitted to the empowered group of ministers (EGoM) last week.
Over the next 20 years, it could earn as much as Rs. 1,500,000 crore, if the revenue from auctioning the other bands of spectrum is included.
Despite this, the consumers will not be burdened with high tariifs as the cost of a call will not rise more than five paise per minute under normal circumstances even if the operators pass on hikes in spectrum prices to consumers, the report says.
TRAI has recommended a reserve price of Rs. 18,000 crore for 5 MHz of spectrum in the 1,800-MHz band in the auction scheduled for August 31. For the 900 MHz band, which will be auctioned at the time of renewal of licences, a reserve price of Rs. 36,000 crore has been recommended for 5 MHz of spectrum, since this band is twice as efficient as the 1800-MHz band.
On the flip side, owing to higher efficiency, the cost of setting up a 900-MHz band network is much less than the 1,800-MHz one, which means the operator would cover up the licence cost.
The regulator has recommended that spectrum in the 700, 2100 and 2300 MHz bands be auctioned within three years. “The government will earn more than Rs. 15 lakh crore if we take into account all the spectrum bands,” a DoT official said.
“The government revenues have been calculated on the basis of net cash inflows over 20 years,” said the report. “The sources of inflows are renewal fees, payment for excess spectrum held by the operators, payment for additional allocations of spectrum to operators holding 4.4 MHz in the 1,800 MHz band, and auction money.”