The Empowered Group of Ministers (EGoM) on spectrum, headed by Finance Minister P. Chidambaram, today recommended lowering the base price of CDMA spectrum by 30-50 per cent, in a bid to attract bidders during the auction of 2G airwaves that is likely to take place before March 31 this year.
The final decision on the reserve price will be taken by the Union Cabinet.
The EGoM also decided that airwaves in the 1800 MHz band in Kolkata will not be re-auctioned. NDTV had reported last week that the panel may consider putting spectrum in the Kolkata circle on the block once again owing to poor response to the auction held on November 12 and 14, which saw no bidders for key circles such as Delhi and Mumbai. Even Karnataka and Rajasthan found no takers.
This auction had drawn muted response from telcos, mainly due to high reserve prices, with the government managing to garner bids worth just Rs 9,407 crore, way below its estimates of Rs 30,000 crore.
The ministerial panel, in its meeting on January 3, had discussed the auction plan prepared by the Department of Telecom (DoT) after the Cabinet approved the sale of unsold GSM spectrum in 1800 Mhz band and in the premium 900 Mhz spectrum band.
"The EGoM deliberated on several issues for about two hours, and then decided to meet again on January 7 to further deliberate on the issues," Telecom Minister Kapil Sibal had told reporters after the meet.
"The EGoM deliberated on 1800/900 MHz spectrum but it could not discuss CDMA (800 MHz). An auction does not seem possible by January 18, but will take place during this fiscal year," a senior source said.
The EGoM, in its agenda note for the auction, had recommended treating existing telecom companies such as Bharti Airtel and Vodafone as new entrants, and had also sought compulsory participation from them.
NDTV had reported earlier that the existing telcos, whose licences will come up for renewal in 2014, will get to retain their spectrum only if they participate in the auction as new entrants -- this means a failure in the next auction will force Bharti Airtel and Vodafone to give up their spectrum once their licenses have expired.
These companies, however, will have the freedom to choose between spectrum in the 900MHz and the 1,800MHz band—both of which will be auctioned simultaneously—in metro cities.
Vodafone has already written to the government opposing the compulsory participation.
Bharti Airtel and Vodafone hold nearly 10 MHz of spectrum in metro cities like Delhi and Mumbai, most of it in the coveted 900 MHz band.
Post the flop auction, the EGoM had lowered the reserve prices for the unbid circles by up to 30 per cent.
The older reserve prices per block were Rs 693.06 crore for Delhi, Rs 678.45 crore for Mumbai, Rs 330.12 crore for Karnataka and Rs 67.08 crore for Rajasthan.
On the auction for CDMA airwaves, which was called off after the two interested companies—Videocon and Tata Teleservices—pulled out, the EGoM had suggested two options: either refer the matter back to the Telecom Regulatory Authority of India (Trai), or conduct the auction after revising the reserve prices.
While a referral to Trai may delay the CDMA spectrum auctions by four months, auctioning the airwaves without reducing the reserve price could see no bidders.
The government is hoping that the second round of auction will be more successful, earning the exchequer Rs 20,000 crore.
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