EGoM for 30 pc cut in base price for unsold spectrum

A ministerial panel on telecom today recommended a 30 per cent cut in base price for 2G spectrum in four circles that remained unsold in last auction -- a suggestion that could fetch Rs 6,200 crore to exchequer.

The four circles -- Delhi, Mumbai, Karnataka and Rajasthan -- were some of the most expensive circles in last month's 2G spectrum auction. The circles saw no takers as operators found the base price too high.

"The Empowered Group of Ministers (EGoM) has decided to reduce the reserve price by 30 per cent in the four circles in 1800 MHz band, where spectrum remained unsold," a source said.

At the old rates, the government would have earned a minimum of Rs 8,843.55 crore if the 5 Mhz (rpt Mhz) each in these four circles were sold out.

The Empowered Group of Ministers (EGoM), which met this evening, also suggested auctioning spectrum in 900 MHz band in Delhi, Mumbai and Kolkata simultaneously with the sale of radiowaves in 1800 Mhz in these four circles.

"We will now be moving the Cabinet for the approval on the pricing and we have also decided that we will complete the auction process within this financial year," Telecom minister Kapil Sibal told reporters here.

No decision has been taken on the auction of airwaves in 800 Mhz band, he added.

The last 2G mobile phone spectrum auction was  virtually a flop as government managed to garner bids worth just Rs 9,407 crore as against a minimum target of Rs 28,000 crore.

Industry experts welcomed the reduction but said selling spectrum in metros could still be a challenge.

"The decision is in the right direction but not far enough. Metros will still be a challenge for making business case. There will be a fallout as those who have purchased spectrum at the old prices may raise objections at the price cut," Cellular Operators Association of India (COAI) Director General Rajan S Mathews told PTI.

PwC India Executive Director Sivarama Krishnan said the metro cities collectively contribute around 40 per cent of the spectrum auction fees. But these markets are saturated and a 30 per cent cut still doesn't make for a meaningful business case for investment, he added.