With prospective auctioneers unhappy with a reserve price-linked payment model, the department of telecommunications (DoT) has mooted a proposal to delink the payment formula for the upcoming 2G spectrum auctions.
?The inter-ministerial council?s recommendations on delinking of auctioneers proposed bid structure from the reserve price may be put up to the EGoM?, a note prepared by deputy wireless advisor MK Rao has said. The EGoM tasked with the 2G spectrum auctions is scheduled to meet on Thursday to finalise the reserve price for the auctions, the roll out obligations on the operators, spectrum mortgage and the one-time levy on existing operators which was referred to it by the Cabinet. Both the pricing issues ? the reserve price and the one-time levy ? will then be flown back to the Cabinet for a final approval.
Furthermore, given the delay on part of the EGoM to take a call on the rollout obligations as well as the base price or the reserve price for the auction, DoT will also place a revised 2G spectrum auction timeline before the EGoM. According to which the information memorandum for the auction will be issued only on August 22, while it was earlier scheduled to be released on August 6.
The revised timeline has been prepared at the behest of the inter-ministerial council, which at its meeting on June 29 had said it wouldn?t be possible to meet the August 31 deadline set by the Supreme Court to complete the auction.
Meanwhile, on the issue of changing the auctioneer?s payment module, according to the request for proposal floated by the DoT the government until now was all set to replicate the 3G spectrum auction model of the year 2010 wherein the auctioneer received a small percentage of the difference between the reserve price and the final bid price.
Along with this percentage commission, DoT had also fixed a minimum fee of R10 lakh in case the 2G spectrum auction failed which would happen if bidding stalled at the reserve price. However, the prospective auctioneers felt that this model wouldn?t fetch enough fee. Especially when the telecom regulator proposed a steep reserve price of R18,100 crore, leaving very little room for any aggressive bidding to take place.
They felt that this had worked well in the 3G spectrum auctions since the government had set a base price of R3,500 crore and the final price was more than R16,000 crore, leaving sufficient room for the auctioneer Rothschild to earn as commission.
Even though the government is yet to finalise the reserve price for the spectrum auctions, no one expects it to reduce significantly, hence the auctioneers are believed to have asked DoT to raise the minimum fee of R10 lakh to R1 crore.