Telecom panel asks trai to review 3G auction price

The Telecom Commission on Tuesday decided to send back to the Telecom Regulatory Authority of India…

The Telecom Commission on Tuesday decided to send back to the Telecom Regulatory Authority of India (Trai) its recommendations on the reserve price for the 2,100-MHz band 3G spectrum for reconsideration.

Government sources said the commission was not satisfied with the Trai’s December 31, 2014, report recommending the 3G reserve price for the upcoming auction at Rs 2,720 crore per megahertz, which was 19% lower than the actual realised price in 2010 auctions.

The Trai is now required to send back its reconsidered views within 15 days. It has the option of either sticking to its stand or review it, following which the government can take a final call. In the past few instances, the Trai has stuck to its stand, resulting in the government having to tweak the final reserve price.

Wednesday’s decision to back reference the matter to Trai followed the report of an internal committee of the Department of Telecommunications (DoT), which said that the reserve price of 3G spectrum should be at Rs 3,899 crore per megahertz, which is about 43% higher than the rate recommended by Trai.

The committee pointed out that the market-determined price of 2010 should be indexed using State Bank of India’s prime lending rate (PLR) and 80% of that price could be fixed as reserve price for 2,100-MHz band for the upcoming auction.

Using indexation based on SBI’s PLR, the figure works out at Rs 4,874.59 crore per megahertz and 80% of its value comes to around Rs 3,899 crore per megahertz.

The Union Cabinet on Monday had approved auction of 380.75 megahertz of second generation (2G) spectrum in three bands — the premium 900 MHz, 1,800 MHz and 800 MHz (used by CDMA operators). While 177.8 MHz in the 900-MHz band is being put up for auction next month in 17 telecom circles, 99.2 MHz in 15 telecom circles in the 1,800-MHz band and 103.75 MHz of airwaves in 800 MHz band in all 22 telecom circles will be auctioned.

The government expects to fetch at least Rs 64,840 crore from sale of these spectrum, which starts on February 23.

The government expects to garner Rs 16,000 crore through sale of 5 MHz of 3G spectrum, which may also be put on auction simultaneously after the defence ministry vacates it.

Currently, Bharti Airtel holds 70 MHz of 3G airwaves in 14 telecom circles in the country and Idea Cellular has 55 MHz of 3G airwaves in 11 circles. Reliance Communications (RCom) holds 60 MHz of 3G airwaves in 12 circles and Vodafone India 55 MHz in 11 circles.

These telcos had won 3G airwaves through an auction in May-June 2010. Each of these telcos got 5 MHz of 3G airwaves in each telecom circle. Successful bidders have to pay within 10 days 33% of the final sale price in case of 1,800 MHz and 25% in case of 900 MHz and 800 MHz.

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