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Corporate Jan 7, 2013

2G auctions: Govt proposes 30-50% cut in CDMA base price

By Firstbiz Staff

The Empowered Group of Ministers (EGoM) on spectrum, headed by Finance Minister P Chidambaram will kick off the next round of 2G auctions from 11 March, 2013.

Sources in the ministry also said that the government has recommended a 30 percent or 50 percent cut in the base price of CDMA airwaves.

AFP

The government had earlier set the reserve price of CDMA airwaves at 1.3 times that of GSM airwaves, a price that was criticised by operators as too high. The price was set at Rs. 3,640 crore per megahertz of spectrum for all of India's 22 telecommunication zones. However, not a single Code Division Multiple Access technology player participated in the recently concluded auctions for airwaves, prompting Telecom Minister Kapil Sibal to indicate a reduction in the price of the 800 mhz spectrum band recently.

Firstpost had earlier reported that Sibal could look at substantial reduction in the price of 800 mhz airwaves and there is a possibility that the price could be lower than the reserve price of the 1800 mhz band. But this could turn out to be wishful thinking, with many opponents who will point out the multiple of 1.3 vis-a-vis the price of 1800 mhz airwaves.

Shares of telecom companies like Bharti Airtel, Idea Cellular and Tata Tele gained after Sibal said the cabinet will soon decide the resere price of CDMA spectrum band. EGoM has referred the decision on the reserved price for CDMA to the Cabinet.

Shares of Reliance Communications surged 3.16 percent to Rs 83.20 and Tata Teleservice (Maharashtra) was at Rs 12.66, up 2.93 percent, on the BSE, while Bharti Airtel was up 1 percent and Idea up 0.27 percent.

The CDMA airwave auction is crucial for Russia's Sistema which has been ordered to shut operations in all but one of India's 22 zones by January 18 as it did not win back airwaves in the last auction.

Post the meeting, telecom minister Kapil Sibal announced that airwaves in 1800MHz and the 900MHz bandwidth of the GSM spectrum will be auctioned first, followed by the auction of the CDMA airwaves in the 800 MHz bandwidth in all circles.

Government failed to auction CDMA spectrum at 1.3 times higher reserve price than that of GSM spectrum in 1800 Mhz band in auctions that concluded in November. The pan-India reserve price for 5 Mhz of spectrum in 1800 Mhz band was fixed at Rs 14,000 crore.

The last round of spectrum fetched the exchequer just Rs 9,407 crore, as against the government expectations of around Rs 28,000 crore, on account of high reserve prices.

With inputs from Agencies

by Firstbiz Staff

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