Saturday, 10 March 2012

TRAI comes out consultation paper for 2G spectrum auctions

Following the cancellation of 122 mobile licences by the Supreme Court last month, TRAI is ready to set the base price anywhere between Rs 620.48 crore to Rs 4,571.85 crore for a single MHz or unit of spectrum. This has been proposed in TRAI’s latest consultation paper to auction the 2G spectrum as per the Supreme Court order. Mobile phone companies whose licences had been cancelled by the apex court had paid Rs 1658 crore for 6.2 MHz of airwaves on a pan-India basis in 2008.
However, now they may land up paying any where between 3847 to 28345 crore. 6.2 units of second-generation bandwidth is the minimum requirement to offer pan-India mobile services during the first five years of operations. The apex court had directed the government to auction the airwaves and licences within four months after seeking recommendations from Trai. The regulator has shortlisted seven models to fix the base price and has sought the industry's reaction to each of these methodologies before it finalises the reserve bid amount for the airwaves sale. This will be a blow to several companies, including Uninor, Etisalat DB and S Tel amongst others, who had demanded that the base price for the auctions be fixed at Rs 1658 crore for 6.2 MHz of airwaves for 20-year period on a pan-India basis. Many of these companies had demanded that the reserve price be such that 'it enables a successful bidder to have an economically viable and bankable business plan within a reasonable period of time'. They had also contended that even at a level of Rs 1,658 crore entry fee paid by new operators, these telcos had not been able to breakeven and further added that the experience of 3G auctions at Rs 16,750 crore for a pan India (5 MHz) spectrum had also not been encouraging so far. For the industry, the next best methodology will be to index the base price to the broadband wireless auctions in 2010, when 20 units of pan-India airwaves fetched Rs 12,848 crore.


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