Let open market establish value of spectrum

3G Spectrum

Let open market establish value of spectrum

As spectrum was an asset of the government and people of India, it must be commercially compensated at market value

Monday, September 29, 2008

NEW DELHI, INDIA: Rajeev Chandrasekhar, MP from Bengaluru and FICCI President has, in a letter to the Prime Minister, urged the need to have an open market based method to establish value of spectrum that the government from time to time gives to the private sector for operating various services so that the exchequer does not lose out.

His reaction came in after Swan Telecom’s valuation created jitters leading to questions being raised on the low pricing of $2 billion of 3G spectrum by the Department of Telecom.

Chandrasekhar said in his letter that since spectrum was an asset of the government and the people of India, it must be commercially compensated at the market value when it was being transferred to another entity or company.

“The transaction clearly established irrefutable evidence that the government’s pricing for spectrum of 4.4MHz was far lower than the actual market value causing considerable loss to the exchequer. There is need for a comprehensive public policy when it comes to commercial terms of monetization of public assets like spectrum, minerals and natural resources so that the exchequer gets its due," he said.

Chandrasekhar pointed out that the arbitrage between the value that the government was receiving for spectrum and the actual market value was to the tune of around Rs.. 8,000 to Rs.. 9,000 crore. On a base price of nationwide spectrum at approximately Rs.. 1,540 crore, this was an appreciation in the hands of the private sector of almost 600 percent in a few months, he added.

©CIOL Bureau