An Empowered Group of Ministers (EGoM) on Monday recommended reducing the minimum price for sale of spectrum used by CDMA mobile operators by up to 50 per cent in the second round of auction planned to begin on March 11 to raise a minimum of Rs 45,000 crore.
The EGoM, headed by Finance Minister P Chidambaram, recommended to the Cabinet that the reserve or the starting price, for the airwaves be cut by 30 to 50 per cent, officials who wished not to be identified said The Cabinet will take a final call on the spectrum price.
The auction for the 1,800 MHz second-generation phone spectrum in four markets, including New Delhi and Mumbai that went unsold in the November 2012 auction, will start March 11, Telecom Minister Kapil Sibal told reporters here. The government will sell 800 MHz and 900 MHz spectrum after the GSM auction, he said.
About 70 per cent of the airwaves went unsold in the November auction that raised Rs 9,410 crore, less than 25 per cent of the amount the government was targetting to raise from spectrum sale this fiscal.
The EGoM had last month recommended a 30 per cent cut in reserve or base price for the second-generation spectrum that wasn’t sold in the auction. The Cabinet may decide this month on the minimum price for the 800 MHz sale, Sibal added.
The November auction of CDMA spectrum (800 MHz) did not attract bidders due to high reserve price. The reserve price set was 11 times higher than what operators paid in 2008.
Back-of-the envelope calculations showed that if the government cuts CDMA spectrum price by 30 per cent, the auction of 800 Mhz together with 900 Mhz and 1800 Mhz airwaves would get up to Rs 48,000 crore.
If the reserve price reduction is 50 per cent, it will get about Rs 45,000 crore at the base price. On December 13 the Cabinet, approved a reserve price for 900 Mhz band in Delhi and Mumbai to be twice of revised reserve price for the 1800 MHz band. For Kolkata, it would be twice the price obtained in November auction of 1800 Mhz.
‘In the 1800 MHz band, quantum of spectrum put up for auction will be 15 MHz in Delhi and Mumbai, while for Karnataka and Rajasthan, it will be 10 MHz with topping up provision of 3.75 Mhz as in November 2012 auction,’ Sibal said.
The government had failed to sell CDMA spectrum at 1.3 times higher reserve price than that of GSM spectrum in 1800 Mhz band in auctions that concluded in November, 2012.
The pan-India reserve price for 5 Mhz of spectrum in 1800 Mhz band was fixed at Rs 14,000 crore.
'Since CDMA technology has few takers, the EGoM felt that it may attract no bidders; hence it will recommend option of 50 per cent price cut as well,' said a source.
The last round of spectrum fetched the exchequer just Rs 9,407 crore, as against the government expectations of around Rs 28,000 crore, on account of high reserve prices. The Supreme Court in February last year had cancelled 122 licences in the 2G spectrum allocation case. It included CDMA licences of Sistema Shyam Teleservices in 21 telecom circles and Tata Teleservices' in three circles.
Telecom operators holding spectrum assigned to them at the old rate of Rs 1,658 crore can sell stake to a non-telecom services company but the sale will not invite the conditions spelt out by the Cabinet late last year, Telecom Secretary R Chandrashekhar said on Sunday. ‘This (Cabinet decision) is not about the sale of equity. This decision is about mergers of licences,’ added Chandrashekhar.
The EGoM, headed by Finance Minister P Chidambaram, recommended to the Cabinet that the reserve or the starting price, for the airwaves be cut by 30 to 50 per cent, officials who wished not to be identified said The Cabinet will take a final call on the spectrum price.
The auction for the 1,800 MHz second-generation phone spectrum in four markets, including New Delhi and Mumbai that went unsold in the November 2012 auction, will start March 11, Telecom Minister Kapil Sibal told reporters here. The government will sell 800 MHz and 900 MHz spectrum after the GSM auction, he said.
About 70 per cent of the airwaves went unsold in the November auction that raised Rs 9,410 crore, less than 25 per cent of the amount the government was targetting to raise from spectrum sale this fiscal.
The EGoM had last month recommended a 30 per cent cut in reserve or base price for the second-generation spectrum that wasn’t sold in the auction. The Cabinet may decide this month on the minimum price for the 800 MHz sale, Sibal added.
The November auction of CDMA spectrum (800 MHz) did not attract bidders due to high reserve price. The reserve price set was 11 times higher than what operators paid in 2008.
Back-of-the envelope calculations showed that if the government cuts CDMA spectrum price by 30 per cent, the auction of 800 Mhz together with 900 Mhz and 1800 Mhz airwaves would get up to Rs 48,000 crore.
If the reserve price reduction is 50 per cent, it will get about Rs 45,000 crore at the base price. On December 13 the Cabinet, approved a reserve price for 900 Mhz band in Delhi and Mumbai to be twice of revised reserve price for the 1800 MHz band. For Kolkata, it would be twice the price obtained in November auction of 1800 Mhz.
‘In the 1800 MHz band, quantum of spectrum put up for auction will be 15 MHz in Delhi and Mumbai, while for Karnataka and Rajasthan, it will be 10 MHz with topping up provision of 3.75 Mhz as in November 2012 auction,’ Sibal said.
The government had failed to sell CDMA spectrum at 1.3 times higher reserve price than that of GSM spectrum in 1800 Mhz band in auctions that concluded in November, 2012.
The pan-India reserve price for 5 Mhz of spectrum in 1800 Mhz band was fixed at Rs 14,000 crore.
'Since CDMA technology has few takers, the EGoM felt that it may attract no bidders; hence it will recommend option of 50 per cent price cut as well,' said a source.
The last round of spectrum fetched the exchequer just Rs 9,407 crore, as against the government expectations of around Rs 28,000 crore, on account of high reserve prices. The Supreme Court in February last year had cancelled 122 licences in the 2G spectrum allocation case. It included CDMA licences of Sistema Shyam Teleservices in 21 telecom circles and Tata Teleservices' in three circles.
Telecom operators holding spectrum assigned to them at the old rate of Rs 1,658 crore can sell stake to a non-telecom services company but the sale will not invite the conditions spelt out by the Cabinet late last year, Telecom Secretary R Chandrashekhar said on Sunday. ‘This (Cabinet decision) is not about the sale of equity. This decision is about mergers of licences,’ added Chandrashekhar.