Empowered Group of Ministers Proposes To Lower Spectrum Price

By July 21st, 2012 AT 1:57 PM

Empowered Group of Ministers Proposes To Lower Spectrum PriceThe Empowered Group of Ministers, chaired by Home Minister P Chidambaram, has proposed to lower the reserve price for the spectrum to be auctioned to Rs 14,000 crore to Rs 16,000 crore.

The Telecom Regulatory Authority of India had earlier recommended the reserve price of Rs 18,000 crore for the 2G airwaves the decision came after a meeting in Delhi on Friday.

However, the Empowered Group of Ministers did not finalise the one-time spectrum fee, which is likely to be taken up in its meeting next week. The EGoM also approved deferred mode of payment for auction winners, under which operators would have to pay 25-30 percent of spectrum fee upfront and the rest in installments over eight years.

The deferred mode of payment was suggested by the Department of Telecommunications. In addition, the telecom companies will have to pay spectrum usage charge of 3-6 per cent of their annual revenues.

The GSM operators will have to pay 35 percent of their bid amount up front, while CDMA players need to pay about 25 percent. The operators will get a two-year moratorium on the balance payment after which it can be staggered over a 10-year period. 

Empowered Group of Ministers discussed three specific issues :

a) The reserve price.

b) Spectrum usage charges.

c) Terms of payment.

The EGoM is going to make specific recommendations on each of these issues to the Cabinet so that the Cabinet decides on it, the Communications Minister Kapil Sibal said after the meeting.

The Empowered Group of Ministers will first present all the options related to the upcoming auction to the Cabinet for a final decision in order to meet the Supreme Court set deadline. The apex court has asked the Government to complete the auction by August 31.

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