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The government has set a reserve price of Rs 14,000 crore for the proposed auction of the 2G spectrum, which is at the lower end of the band recommended by the group of ministers on telecom, much lower than the price set by telecom regulator.
The Union Cabinet also approved a levy of 3-8 percent on different slabs as annual spectrum usage charges, which was in line with recommendations of the Empowered Group of Ministers. The decision was taken at the cabinet meeting held today.
The Empowered Group of Ministers, headed by P. Chidambaram (now Finance Minister), had suggested a reserve price at Rs 14,000-15,000 crore for 5 Mhz of airwaves. The Telecom Regulatory Authority of India had recommended a base price of Rs 18,000 crore.
In a major development, India’s Supreme Court cancelled 122 2G licences provided after January 2008 in on grounds they were issued in a “totally arbitrary and unconstitutional” manner. The court also directed TRAI to make fresh recommendations 2G licence allocations. The companies that lost licences are Uninor (a joint venture between Unitech and Norway’s Telenor), Loop Telecom, Sistema Shyam (joint venture between Shyam and Russia’s Sistema), Etisalat DB (joint venture between Swan and Etisalat of UAE), S Tel, Videocon, Tatas and Idea Cellular.
The apex court had asked the government to conduct fresh auctions by August 31, but meeting this deadline looks extremely difficult. The reserve price would still disappoint the industry, which had been seeking at least 80 percent cut from TRAI recommendations, as the pricing would result in soaring of telecom calls in the country.
The Cellular Operators Association of India, the GSM operators body, had accused TRAI of “blatantly” ignoring industry representations on spectrum pricing and auction, and continuing to push its flawed recommendations.
Saurabh August 6, 2012 at 10:09 pm
I heard a news on a business channel that Uninor will bid for 9 circles while Videocon is interested in 8 circles, Tata Docomo and Idea in 3 and 9 circles respectively where they have lost license. So there are very little chances of anyone getting PAN-India. But wait, here is some twist in the story,
That news also indicated that our very own Mukesh Ambani’s company Reliance Industries will also participate in the auction and if they are participating, I’m sure we can have Reliance as Pan-India license winner.
I was just thinking whether it is just a coincidence or what? Reliance Industries wanted Goverment to set base price at 8 times to the cost licenses were given in 2008. In 2008 Pan-India licenses were provided for Rs.1651 crores. Now as per Reliance Industries recommended price it comes out to be 1651 X 8 = 13208 crores. The base price is set at 14000 crore which is near the figure of what Reliance suggested. So has the base price been set to benefit Reliance Industries? RIL has around 75000+ crores cash surplus which company needs to implement in new sectors. So money is not a problem for them. They already have Pan-India 4G spectrum. They have got the base price they wanted so that other find it hard to get spectrum as other operators are not in situation to bid.
This just can’t be a coincidence. Policies have been made to help Reliance Industries.
Like Apple surprises the Tech world, Reliance suprises the corporate arena in India. Today the stock price of Reliance Industries also jumped more than 5 percent which is highest jump since March. Some Insider know what’s cooking in Reliance.
Rajesh August 6, 2012 at 8:17 am
Even if the govt. gets profit… it goes to some bad hands only… no way of using those money for the people.. always money laundering will happen..
docomo August 5, 2012 at 9:20 am
can anyone tell me wen the 800 and 900 MHz spectrum wl be auctioned? tht is currently acquired by airtel, voda and idea?
Saurabh August 5, 2012 at 8:50 am
While COAI is still of the opinion that reserve price is too high, Videocon Industries has suprised everyone by saying that Auction base price looks attractive and they will definately participate in the spectrum auction. I’m not sure whether they are in a position to retain Pan-India licenses but they will try hard to retain it in their operational circles.
Tushar Gaikwad August 4, 2012 at 8:31 pm
Tariffs will rise as the money paid from spectrum will be recovered from subscribers….
But the Govt. will earn rightful amount for the precious spectrum, maybe it will help the Indian GDP Growth !!
ajju August 4, 2012 at 5:05 pm
spectrum is India’s precious property which is very limited we should not sell it on low price its a good move when others prices are rising then why we people keep shouting when call rates go high. On long term it will yield a very good result for India’s high GDP growth rate its a good move
ANIRBAN August 4, 2012 at 4:13 pm
Very bad move.the day will not so far when call rates becomes again 2rs/min.
Saurabh August 4, 2012 at 12:43 pm
Not only Rs.14,000 crores. A total of 13.75 MHz spectrum is to be auctioned in 1800MHz band and also CDMA spectrum will be auctioned whose base price is set 1.3 times the price of GSM 1800MHz spectrum. Even at this base price, Goverment will be richer by a minimum Rs.56,700 crores. But final auction price will clear the picture.
Avadhesh August 4, 2012 at 3:45 am
It will be very interesting to see in comming days that all india lic. sold before in 1500 cr in 2008 , will now fetch 14,000 Cr minimum to Government Account? Let us see and watch….
Raghu August 3, 2012 at 11:37 pm
@Amit.G
it is definitely a bad move.COAI and AUSPI are un-happy with the move.
Soumen Ghosh August 3, 2012 at 10:43 pm
What is tha actual date of auction?
Soumen Ghosh August 3, 2012 at 10:41 pm
Is their any new fresh telcos are interested to participate this 2g auction?
prem August 3, 2012 at 9:57 pm
How many slot will be auction. i hard that they will be any technology of this frequency. like 3g or 4g
Amit.G August 3, 2012 at 9:15 pm
Bad move… It will lead to hike in tariffs & definitely Uninor, MTS will walk out
Saurabh August 3, 2012 at 8:58 pm
It’s good to see that something comes on reserve price and finally it’s been set but companies will not find it good as it’s not the final price they have to pay.
The Govt used the formula of first pricing thing higher and then reduced some part of it to just show that now it is cheap and affordable. It’s like shop owner of any product who prices things higher as he knows that people will bargain and then reduce it’s price on request.
I hope auction ends till October 15th, 2012. But before this lets see what reaction comes from COAI and AUSPI. There is much more chances of auction failure in some circles at this price.
krishnendu August 3, 2012 at 8:47 pm
good move.