EGoM suggests lower price for spectrum auction

Recommends 80 pc cut in reserve price

The Empowered Group of Ministers on telecom on Friday decided to recommend to the Cabinet a reserve price lower than what the sector regulator has suggested for the 2G spectrum auction, a senior government official said.

Earlier, the Telecom Regulatory Authority of India (Trai) had recommended a base price of Rs 3,622 crore per unit of spectrum, called Mega-Hertz, for the auction of spectrum vacated from Supreme Court, cancelling 122 licences issued by the then telecom minister A Raja in 2008.  As this base price translated to over Rs 18,000 crore for a pan-India spectrum, telecom companies have opposed it saying that it would lead to hike in tariff. The telecom companies also suggested 80 per cent cut in the reserve price.What price was exactly recommended by the panel is not yet known, however sources said that Empowered Group of Ministers may recommend reserve price between Rs 14,000 and Rs 16,000 crore for pan-India spectrum of 5 Mhz with existing spectrum usage charge of 3-8 per cent.

After the two-and-a-half hour meeting, Telecom Minister Kapil Sibal told reporters that the committee has discussed the issues related to reserve price, spectrum usage charges and terms of payment by licence holder. The suggestions of the ministerial panel on all these issues will be placed before the cabinet for final decision. However, the minister refused to divulge further details of the suggestions.At the last meeting, the EGoM had asked the Department of Telecom (DoT) to prepare a matrix of reserve price in the range of Rs 12,000 crore to Rs 18,000 crore and do an impact analysis on government revenue at different rates as well as on mobile tariff. In Friday’s meeting this impact analysis was discussed in detail, sources said.

The Empowered Group of Ministers may recommend to the cabinet giving auction winners an option to make deferred payment of charges as suggested by Trai. In that case, the telecom companies will have to pay a certain amount of money upfront for the spectrum and the rest over a certain period of time.

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