Base price slashed 30% for spectrum unsold in 4 circles
However, analysts said despite the reduction the government does not stand much chance to get bids in the four circles as it is still too high for any new player. A reduction of 50% would have attracted new players to bid for these circles.
“The four circles have high tele-density and are difficult markets for new players. A 30% reduction in the reserve price would not be attractive for any new player. For incumbents, participating does not matter much because they already have spectrum. The government needs to lower the entry barrier for new players to get in these circles which it has once again failed to do,” said a telecom analyst.
If these four circles once again do not elicit any bids, it would create a problem for the government since it needs auction-determined prices to levy a one-time charge on incumbent operators for spectrum held beyond 4.4 MHz. Industry players said that the government would be left with no choice but to lower the price once again.
Analysts said that the price of 900 MHz spectrum is also high and it remains to be seen how the two affected players – Bharti Airtel and Vodafone – bid. The