Telecom spectrum reserve price at Rs. 3,622 cr

MUMBAI, INDIA: The Empowered Group of Ministers (EGoM) on telecom on Friday decided to recommend to the cabinet a reserve price lower than what the sector regulator has suggested for the 2G spectrum auction, a senior government official said.

The Telecom Regulatory Authority of India (TRAI) has recommended a reserve price of Rs.3,622 crore for 1 Mhz pan-India spectrum, which is around 10 times higher than the price at which 2G licences were allocated in 2008 under then telecom minister A. Raja.

This has led to an uproar in the industry with telecom operators warning of a 100 perc ent hike in tariffs if these proposals are accepted and demanding almost a 80 per cent cut.

But TRAI has been saying that there should not be more than 10 paise per minute hike in the tariffs.

Sources said the EGoM was not in favour of a major reduction in the price.

Friday's meeting, which lasted almost two-and-a-half hour, discussed three specific issues -- what should be the reserve price, spectrum usage charges and 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," Communications Minister Kapil Sibal told reporters here after the meeting.

The ministerial panel had approved other issues including roll-out obligations for the operators and proposal to allow telecom firms to mortgage spectrum in previous meetings.

According to sources, the EGoM had asked the DoT to make a matrix of various levels of reserve price and spectrum usage charge and the impact that would have on the tariffs for consumers and the revenue accrued to the government.

The Supreme Court Feb 2 ordered cancellation of 122 licences issued in 2008 and asked the telecom department to redistribute these through an auction process.

The EGoM, headed by Home Minister P. Chidambaram, includes Sibal, Information and Broadcasting Minister Ambika Soni, Defence Minister A.K. Antony, Law Minister Salman Khurshid, and Minister of State in the Prime Minister's Office V. Narayanasamy as members.