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Rediff.com  » Business » Trai recommends up to 81% cut in spectrum auction base price

Trai recommends up to 81% cut in spectrum auction base price

September 09, 2013 17:24 IST

The telecom regulator recommended sharp cuts in reserve prices for the next round of spectrum auctions after previous efforts at selling the airwaves failed. The Telecom Regulatory Authority of India also said no spectrum would be reserved for existing players when their licences expire and suggested that airwaves can be traded.

Trai slashed the combined spectrum auction reserve price in the premium 900 MHz band in the circles of Delhi, Mumbai and Kolkata by about 79 per cent to Rs 650 crore (Rs 6.5 billion) per MHz against Rs 3,074.18 crore (Rs 30.7418) per MHz earlier.

The maximum reduction of 81.38 per cent is in the Mumbai circle, where the floor price has been reduced to Rs 262 crore (Rs 2.62 billion) per MHz compared with Rs 1,404.28 crore (Rs 14.0428 billion) per MHz of spectrum, as per the regulator's previous recommendation.

It recommended an about 60 per cent cut in the pan-India reserve price for the third round of 2G spectrum (1800 MHz) auctions compared to its previous suggestions.

Trai has proposed Rs 1,496 crore (Rs 14.96 billion) per megahertz of airwave frequencies in the 1800 Mhz band in a minimum lot of 5 MHz for new players, which comes to Rs 7,480 crore (Rs 74.8 billion), compared with its earlier suggestion of Rs 18,200 crore (Rs 182 billion).

The government is required to conduct the third round of spectrum auction for 1800 Mhz to comply with a Supreme Court order. The entire spectrum freed from the cancellation of 122 licences in February 2012 in the 2G spectrum allocation case has to be auctioned.

Asked if the reserve price was too high last time, Trai Chairman Rahul Khullar said: "Yes... please understand the approach has completely changed from the previous pricing regime."

The regulator has suggested a lower reserve price even in service areas where spectrum was sold in November 2012.

When asked about the relief, if any, for telecom service providers that bid in the November auction, Khullar said: "We are only recommending reserve price and it is not the final price. Let market-determined price come through auction then we will decide what to do."

The regulator has denied any reservation of spectrum for existing players Airtel, Vodafone and Loop Mobile in the auction of 900 Mhz, as proposed by the Empowered Group of Ministers on spectrum, headed by Finance Minister P Chidambaram.

The government has to auction the premium 900 Mhz band being held Airtel, Vodafone and Loop in some circles as their licences expire in the second half of 2014. No priority will be accorded to these licensees, the regulator said.

Trai has not recommended auction for CDMA spectrum. The regulator has proposed allowing trading of spectrum by those who buy airwaves through auctions. "Trading has to be permitted and it is to be only by outright transfer, that means no temporary leasing of spectrum," Khullar said.

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