To ensure that the biggest-ever telecom spectrum auction from October 1 is conducted without any glitches, the government on Monday kick-started mock auction among the seven qualified bidders, according to top sources in the ministry.
"The mock auction is on since morning. Mock auction will take place today (Monday) and tomorrow (Tuesday)," official source in the Department of Telecommunications said.
The company, mjunction services limited, is advising the government on this auction and also conducting the mock auctions.
The companies that have qualified are Bharti Airtel, Vodafone India, Reliance Jio Infocomm, Reliance Communications, Idea Cellular, Aircel and Tata Teleservices.
The total amount of spectrum to be offered for sale is 2,354.55 MHz. Overall, based on the reserve price, the mop up is expected to be Rs 5.66 lakh crore.
The 2,300-plus MHz of airwaves on the block for telecom operators is in seven bands — 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz and 2,500 MHz — as against 470.75 MHz in the previous round, which is set to fetch the exchequer $17 billion during its tenure.
The government has decided to allot the right to the spectrum won through auction for 20 years.
The operators will have the choice of both upfront and instalments payment options. The service providers who win airwaves below 1 GHz bandwidth will have to pay 25 per cent upfront, and for those winning above that, the upfront payment will be 50 per cent.
One new bidding-friendly measure the government has adopted this year is that spectrum won will be assigned within 30 days from date of upfront payment. Interest on deferred payment, linked to base rate, will be 9.3 per cent this year against 10 per cent in 2015.
For the successful bidder, the lock-in period of equity in the company has been reduced to one year instead of the earlier stipulation of a minimum period of three years or completion of roll out obligation, whichever is later.
In a meeting of the cabinet in June, chaired by Prime Minister Narendra Modi, an official nod was given for the reserve price and the auction norms.