2G auction: EGoM slashes base price 30% for unsold spectrum in 4 circles

The panel of ministers on spectrum has reduced the base price for unsold airwaves in four regions - Delhi, Mumbai, Karnataka and Rajasthan - by 30%, and approved the telecom department's plan to simultaneously sell these airwaves along with a portion of spectrum held by incumbent operators before March 31, Telecom Minister Kapil Sibal said on 07 December 2012.

The Centre had failed to attract even a single bid for 2G airwaves in the 1800 MHz band in these four regions in the recently concluded sale process. The auctions turned out to be a damp squib, with the Centre getting less than a fourth of its revenue target of 40,000 crore as there were no takers for about 57% of the airwaves put on sale.

Sibal said the government would hold another round of auctions in the current financial year, where unsold 2G airwaves in the four regions, as well as airwaves held by incumbents in the 900 MHz band in Delhi, Mumbai and Kolkata, would be sold simultaneously. He also said the EGoM headed by Finance Minister P Chidambaram did not take a decision on the pricing of CDMA spectrum in the 800 MHz band.

The CDMA auctions in the 800 MHz band were cancelled after both potential bidders, Tata Teleservices and Videocon, withdrew their applications, citing the high reserve price. The minimum price for these airwaves had been set at 1.3 times that of GSM spectrum in the 1800 MHz band.

The telecom minister added that the inter-ministerial panel would seek the Cabinet's approval on the reduced base price for unsold airwaves in Delhi, Mumbai, Karnataka and Rajasthan. Mobile operators warned that there would be no takers for airwaves in these four regions despite a 30% cut in the base price.

"The reserve price should have been reduced by 80% if the government was serious about attracting bids. We want the EGoM to explain how they arrived at this 30% figure — what were the calculations behind it? This will also lead to the industry seeking a similar reduction in other regions where bids were at the reserve price," said Rajan Mathews, directorgeneral of the Cellular Operators Association of India, the industry body representing GSM operators.

The mobile phone permits of incumbents in the four metros — Delhi, Mumbai, Kolkata and Chennai — are up for renewal in 2014, and the EGoM had recently endorsed sector regulator Trai's recommendation that airwaves held by these companies in the 900 MHz be 'refarmed', or reallocated, through an auction process 18 months prior to their renewal date.

The panel had earlier decided that companies such as Bharti Airtel, Idea Cellular and Vodafone could retain 2.5 MHz of airwaves in the more efficient 900 MHz frequency band if they agreed to pay double the price discovered at the recently concluded auctions, and the remaining frequencies would be put up for sale.

The telecom department had told the EGoM that the best option was to combine the sale of the 900 MHz band held by incumbents with the second round of auctions to find bidders for unsold spectrum.

A telecom ministry official said the base price for airwaves in the 900 MHz would be double that of the 1800 MHz band that was sold in the recent auctions, in line with Trai's recommendations.

Source: http://cablequest.org/news/broadband-and-iptv-news/item/192-2g-auction-egom-slashes-base-price-30-for-unsold-spectrum-in-4-circles.html