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Bid to halve CDMA base price

New Delhi, Jan. 7: An empowered group of ministers (EGoM) today recommended up to a 50 per cent cut in the minimum reserve price of spectrum used by CDMA operators in the second round of auction that will begin on March 11.

The auctions will begin with the sale of 1,800MHz second-generation (2G) spectrum in four circles, including New Delhi and Mumbai, that went unsold in the November round, telecom minister Kapil Sibal told reporters here.

“The CDMA spectrum auction will be held after the sale of GSM radio waves in the 1,800MHz and 900Mhz band,” said officials in the department of telecom (DoT).

The cabinet will take a final call on the EGoM’s proposal to halve CDMA spectrum base price.

The reserve price in the 1800MHz band will be 30 per cent lower than in November. The reserve price in the 900MHz band in Delhi and Mumbai will be twice the revised base price for the 1800MHz band. For Calcutta, it will be twice the price obtained in the November auction of 1800MHz.

About 70 per cent of the airwaves were unsold in the November auction, that did not see any takers for CDMA (Code Division Multiple Access) airwaves (spectrum) because of the high price.

The government had fixed CDMA spectrum price at 1.3 times that of GSM airwaves in the 1800MHz band — 11 times higher than the amount operators paid in 2008.

The cut in the base price for CDMA spectrum is expected to attract bidders.

The CDMA airwave auction is crucial for Sistema Shyam Teleservices Ltd — the local unit of Russia’s Sistema — to continue operating in India.

Sistema Shyam is set to lose its mobile permits on January 18, according to a Supreme Court directive. However, the company last month declared that it intended to continue providing services and is expected to participate in the upcoming auctions.

DoT officials said the government would seek the Supreme Court’s permission to extend the validity of the mobile permits of Sistema Shyam till March-end to ensure it can deliver services till the auctions.

The Russian group had earlier warned that it would seek billions of dollars in damages by initiating international arbitration proceedings if India failed to reinstate the mobile permits of its local unit. The Russian government has a 17.14 per cent stake in Sistema.

The stocks of CDMA operators — Tata Teleservices (Maharashtra) and Reliance Communications — rose around 2 per cent on the bourses today after the news.

 
 
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