As the process of auctioning telecom spectrum got underway, sector regulator Trai chairman acknowledged that base price set for buying spectrum was expensive but did not see it as deterrent for companies to participate in the auction.
"As for Rs 14,000 crore (Rs 140 billion) as a reserve price that the government has set, it is expensive but I don't think it is a deterrent and even at Rs 18,000 crore (Rs 180 billion( people were going to bid. All in all, I don't see any problem in the auction," Trai chairman Rahul Khullar told PTI.
The final minimum price of Rs 14,000 crore (Rs 140 billion) for 1800 Mhz band and Rs 18,200 crore for 800 Mhz was decided by government based on initial recommendation made by Telecom Regulatory Authority of India.
The regulator on April 23 recommended around 10 times high base price at Rs 18,200 crore (Rs 182 billion) for the airwaves used for telecom services in 1800 Mhz band compared to the amount paid by telecom companies earlier to get permits for pan-India mobile telephony business.
United Arab Emirates-based telecom firm Etisalat, permits of whose Indian telecom venture Etisalat DB were cancelled by the Supreme Court, has proposed to set reserve price on the basis of Rs 1,658 crore (Rs 16.58 billion) but decided not to participate in the process after seeing information memorandum on spectrum auction.
Another company, Sistema Shyam, whose licences have been quashed by the apex court but in interested to continue its operations has also asked that reserve price should be kept at Rs 1,658 crore for pan-India spectrum.
Telecom companies even protested against the price recommended by Trai and said that it can result in doubling of telecom tariffs in the country.
Contrary to this, the Trai chairman said that there will be no tariff increase if only auction determined price is paid for airwaves and used for telecom services.
"If we only talk about this auction, then there be not a difference of even 1 paisa," Khullar said.
He added that some amount tariff increase cannot be ruled out when all proposal of government in works gets implemented.
"Our own estimate say that its (tariff increase) between 5 to 6 paisa. That too if you make all sorts of assumptions about repricing of spectrum, one-time charge, payment of excess spectrum and you factor in all re-pricing for next 20 years," the Trai chairman said.