The Chairmen and Managing Directors of the two PSU's, BSNL's Anupam Srivastava and MTNL's P K Purwar, told PTI that the telecom firms will not participate in the auction.
Srivastava said there is no need for additional spectrum at this point of time.
The public sector firms had not participated in the previous auctions held in November 2012, March 2013 and February 2014.
The auction of 2G and 3G spectrum is scheduled to start from March 4 and bidders can submit their applications by February 16.
The auction of airwaves in four bands - 800MHz, 900MHz, 1800MHz and 2100MHz - could garner Rs. 82,395 crores at the base or minimum price, but sources said the government expects total proceeds to exceed Rs 1 lakh crore.
The quantum of spectrum to be put on auction is 103.75MHz in 800MHz band in all service areas, 177.8MHz in 17 service areas in 900MHz band and 99.2MHz in 15 service areas in 1800MHz band.
For 2100MHz band, used for 3G services, 5MHz in 17 circles will be put up for auction.
The auction is crucial for private firms such as Bharti Airtel, Vodafone, Idea Cellular and Reliance Communications whose licences in many circles are coming up for renewal by the end of this year and they need to buy back airwaves.
Government had garnered about Rs. 62,162 crores from the last auction in February 2014. Proceeds from this year's auction are expected to help the government meet the fiscal deficit target of 4.1 percent of GDP.