Trai recommends over 15 pct rise in CDMA spectrum reserve price

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New Delhi | Updated: November 27, 2014 7:49 PM

Sectoral regulator Trai has recommended a reserve price of Rs 3,104 crore per megahertz for CDMA spectrum...

Trai had proposed a reserve price of around Rs 1,800 crore for 800 Mhz for the auction in March 2013. (Reuters)Trai had proposed a reserve price of around Rs 1,800 crore for 800 Mhz for the auction in March 2013. (Reuters)

Sectoral regulator Trai has recommended a reserve price of Rs 3,104 crore per megahertz for CDMA spectrum, which is 15 per cent more than the rate it had proposed in February.

The regulator had proposed a reserve price of Rs 2,685 crore per megahertz for 800 Mhz, used for CDMA services, in its February recommendations.

Trai had proposed a reserve price of around Rs 1,800 crore for 800 Mhz for the auction in March 2013 wherein Sistema Shyam Teleservices (SSTL) was only bidder and it won radiowaves to operate in 8 circles for Rs 3,639 crore.

The new reserve price of Rs 3,104 crore is 72 per cent higher than the Rs 1,800 crore rate in 2013 auction.

In a reply to Department of Telecom (DoT), Trai said, “In the light of current data trends and other relevant factors since the valuation exercise was carried out in February 2014, the Authority has decided to carry out fresh valuation of the spectrum in 800 Mhz band.”

The DoT had sent back Trai’s recommendations on 800 MHz band for reconsidering some points.

The Department had also sent back Trai’s proposals on 900 Mhz and 1800 Mhz bands, on which the Authority had reiterated its earlier stand on all proposals.

Trai said regarding DoT’s request for reviewing price, it is of the view “that since the reserve prices have been referred for reconsideration, it is obliged to take into account developments subsequent to its earlier Recommendations of February 2014 for the 800 MHz band.

The Telecom Regulatory Authority of India (Trai) said since it conducted a fresh valuation exercise for the 1800 MHz band spectrum recommendations released on October 15, the updated valuations would need to be incorporated into the valuation of the 800 MHz band in view of the DoT’s present reference.

The Authority applies five approaches to calculate the valuation of 800 MHz which include 1.5 times or 2 times of value of 1800 Mhz band, producer surplus model, model based on revenue from data services and February auction determined price of 900 MHz (for three metro circles).

It then fixes the reserve price at 80 per cent of the average valuation arrived through the five approaches.
“…in line with the viewpoint taken in October 2014 recommendations on valuation and reserve price of 1800 MHz spectrum, the valuation of 800 MHz spectrum has been recalculated,” Trai said.

Apart from the reserve price, Trai has reiterated its other recommendations like putting the entire available spectrum with the DoT in 800 Mhz to auction.

The regulator also stood by its recommendation that entire CDMA spectrum held by MTNL be put up for auction as it is underutilised and government should take back CDMA spectrum held by BSNL for auction except one block of frequency in Jammu and Kashmir, Assam and North-East service areas.

Trai has also reiterated that it should be mandatory for new entrants to win at least 5 Mhz of spectrum specially in the case of contiguous blocks.

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