FinMin against cut in unsold spectrum price

The Finance Ministry is likely to oppose a lower floor price for unsold spectrum on the grounds that it may erode a level-playing field between old and new bidders and also invite legal hurdles from those who have paid more to get the airwaves.

 “We in the ministry have not taken a view on the proposal to lower the reserve price for spectrum as yet for various reasons, the foremost being the unnecessary legal wrangle which may arise if the remaining spectrum goes under the hammer at a lower price,” a ministry official has said on the condition of anonymity.

The ministry’s views are quite contrary to the views of the Planning Commission and the Department of Telecom (DoT). The commission and the DoT are in favour of a lower floor price for the remaining airwaves, expected to be sold by March next year.

The DoT has said it will seek the telecom regulator’s views on revising the reserve price, which has been criticised by operators as being too high. Spectrum blocks put on sale early this month received a tepid response from buyers, apparently because the floor price set for that was too high. Only 55 per cent of the airwaves put on sale had received bids.

Planning Commission Deputy Chairman Montek Singh Ahluwalia, too, had said that it was a mistake to have a high reserve price for the airwaves and there was need to relook at the price during the second auction planned later this fiscal.

Ahluwalia’s statement assumes significance as he was also a part of an empowered group of ministers that set Rs 14,000 crore as the base price.

“Now, if there is any move to lower the price for the airwaves which are going to be sold by March, those who have paid for it in the November round will feel the pinch,” the official said.

The government had set a reserve price of Rs 14,000 crore for pan-India, broadly drawing from the basis used by the Comptroller and Auditor General (CAG) in calculating the loss in the previous sale in 2008. But it managed a little more than Rs 9,408 crore in the auction that lasted barely two days from November 12.

The key markets, including Delhi and Mumbai, remained unsold in the auction. Of the 176 blocks put up for sale, only 101 received bids.

The government is going to decide in a few weeks the procedure it is going to follow for the auction of the remaining airwaves.