The Empowered Group of Ministers on 22 November approved the reserve price recommended by the Telecom Commission for the next round of auction.
While the Telecom Regulatory Authority of India had suggested a base price of Rs 1,496 crore for 1 MHz of pan-India spectrum in the 1800 MHz band, the Commission, the highest decision-making body in the Department of Telecom, had pegged the price at Rs 1,765 crore.
For the 900 MHz band, the EGoM has approved the Commission’s proposal to increase the reserve price by 25 per cent in Delhi, Mumbai and Kolkata compared to what TRAI had suggested.
The Government is hoping to raise nearly Rs 40,000 crore from the sale of spectrum.
But analysts said the higher base price could mute the bidding. “Rs 40,000 crore seems to be unrealistic considering the health of the sector and participation from the companies,” said Prashant Singhal, Partner in a member firm of E&Y Global.
On the 800 MHz band, the EGoM has asked the DoT to send a fresh reference to TRAI to set the reserve price. This could delay the auction of this frequency band as the regulator will have to go through the entire consultation process again.
CDMA operators said they were unhappy with the development. “The regulator has already discussed the issue threadbare in its previous paper, so referring it back will only delay things. The EGoM should have taken a decision on the pricing so that 800 MHz can be sold at the same time as 1800 MHz and 900 MHz,” said C. S. Rao, President, Association of Unified Telecom Service Providers of India.
The EGoM did not take a decision on other key aspects, including mergers and acquisition policy and spectrum usage charge. Mohammad Chowdhury, Leader-Telecom, PwC, said there will be targeted auction activity this time as incumbent players need to buy spectrum as their 20-year licence expires next year.