EGoM for hefty cut in spectrum floor price to lure bids

Last auction in November had got poor response

After the November auction of spectrum failed to lure bidders in many circles, an Empowered Group of Ministers (EGoM) Monday recommended up to 50 per cent reduction in the reserve price for auction of airwaves.

After the sharp cut, the exchequer is expected to mop up over Rs 45,000 crore according to rough calculations. This, along with the November sale that raised Rs 9,410 crore, will see the government surpass its target of garnering Rs 40,000 crore from spectrum sale this year.

The EGoM, chaired by Finance Minister P Chidambaram, recommended to the cabinet the cut in the start price of spectrum, official sources said. The cabinet will take the final call.   The next auction of airwaves will start on March 11, Telecom Minister Kapil Sibal said. He said the auctions will include the 1800MHz and 900MHz bands. The auction of 1,800 MHz band in four markets, including New Delhi and Mumbai, had drawn a blank in the November 2012 sale of airwaves.

The auction schedule for 800 MHz band airwaves used in CDMA-based mobile services was also finalised.

About 70 per cent of the airwaves went unsold in the November auction that raised less than 25 per cent of the revenue earning the government targeted from spectrum sale this fiscal. The CDMA airwaves auction will begin once the GSM auction ends. As much as 12.5 MHz in the 900MHz band will be auctioned in Kolkata. Sources said the government would the previous auctioneer in March as well. On one-time fee, the sources said that telecom companies will have to pay a portion of the Rs 24,989 crore fee within 10 days of the demand notice and pay the rest over a period of 10 years.