The Telecom Regulatory Authority of India on Saturday recommended a pan-India reserve price of Rs 2,685 crore per MHz of 800 MHz spectrum, which currently is being used by CDMA operators like Reliance Communications, Tata Teleservices and Sistema Shyam.
At Rs 2,685 crore per MHz, the reserve price is 18.3% higher than final auction price of Rs 2,270 crore for 1,800 MHz, which is used by GSM operators (See table). Compared to the last reserve price announced by the government for CDMA auction in March 2013, which saw only one operator buying spectrum, the reserve price now is 50% higher.
Providing the rationale for the reserve price, the Trai said the methodology is the same as for 1,800/900 MHz earlier, using the bottom-up approach and also factoring in the current prices discovered in the auctions. The reserve price has been pegged at 80% of the valuation of spectrum.
The Trai said the 800 MHz spectrum is no more only for CDMA and EVDO services, but also for newer generation services like HSPA and LTE. The CDMA operators were clearly upset with the reserve price, calling it high, and stating that it would dissuade them from buying spectrum.
Though none of them offered an official response stating that they need time to study the recommendations, their informal comment was that the 800 MHz spectrum is less popular for services like HSPA and LTE.
The recommendations for 800 MHz comes after protracted differences between the Trai and the department of telecommunications. On September 9, when the regulator submitted its recommendations to the government, it proposed auctions only for 1,800 MHz and 900 MHz band, stating that there were no takers for 800 MHz in the previous two auctions and the ecosystem was dying with a fall in subscribers. It stuck to its stand when the DoT asked it to reconsider its decision.
The Traiís stand was that 800 MHz auction should not be done at this stage and instead the government should explore the possibilities of creating an e-GSM band, which would find more takers.
The DoT finally sent a fresh communication to the Trai in December 2013, seeking reserve price for auction for 800 MHz spectrum. Since the government rejected the recommendation of exploring the possibility of creating an e-GSM band, the Trai has now closed that option.
In March 2013, Sistema Shyam was the only bidder for the CDMA spectrum and won radiowaves to operate