The Telegraph
Tuesday , January 1 , 2013
Since 1st March, 1999
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More spectrum to be put up for auction

New Delhi, Dec. 31: The empowered group of ministers (EGoM) on telecom, scheduled to meet on Thursday, is likely to offer more spectrum for sale in the upcoming auctions.

The move is expected to dispel concern among operators that limited amounts of spectrum are being sold at high prices.

Sources said the EGoM would also push for permitting GSM operators to buy radio waves in the 800MHz band, which is restricted to CDMA players such as Sistema Shyam, Tata Teleservices and R-Com. GSM operators, including Bharti Airtel and Vodafone India, have shown interest in buying spectrum in this band to offer data services.

“The panel may decide on the pricing of the 800MHz band without seeking fresh suggestions from sector regulator Trai, as that would be a time-consuming effort,” sources said.

The panel is the final decision-making body on all auction-related issues and need not seek the Telecom Regulatory Authority of India’s views to make policy moves.

In the November auctions, there were no bidders for the 800MHz spectrum, the base price for which was set at Rs 18,000 crore.

By March, the government wants to sell spectrum in the 1800MHz band in Delhi, Mumbai, Karnataka and Rajasthan, for which the base price has been slashed 30 per cent. The Centre is also putting airwaves in the 900MHz band on sale in Delhi, Mumbai and Calcutta for which the base price will be twice that of the 1800MHz band.

Sources said the EGoM, chaired by finance minister P. Chidambaram, might consider selling around 12 slots of spectrum in both 1800MHz and 900MHz bands in Delhi and Mumbai, while Karnataka and Rajasthan will have 11 slots each in the 1800MHz band. This is higher than the eight slots offered in each of these circles during the November auctions.

For Calcutta, 10 slots are likely to be put up for sale in the 900MHz band.

Each slot will be of 1.25MHz and all participants will be allowed to buy at least four slots. If the panel decides to sell radio waves in the 800MHz band, there will be three more slots up for grabs in all 22 circles.

“Increased amount of spectrum coupled with a lower base price is expected to attract more interest from prospective bidders,” said officials in the department of telecom (DoT).

The DoT also plans to put a clause in the auction rules stating that all those companies whose licences are coming up for renewal in 2014 will have to “compulsorily” participate in the auction as “new entrants”. Bharti Airtel and Vodafone India will be affected by this norm. These companies have already challenged the DoT’s intention and threatened legal ramifications.

New players may be required to bid for a minimum of four blocks in both the 1800MHz and 900MHz bands in Delhi and Mumbai, sources said.

In Rajasthan and Karnataka, where airwaves in the 1800MHz band will be auctioned, they may have to bid for four blocks. However, for auction in the 900MHz band in Calcutta, new players may be required to bid for minimum of one block only.

“The existing operator can bid for a maximum of the full blocks available minus current holding, subject to the capping rule,” a source said.

The government, which has fallen short of its Rs 40,000-crore revenue target from the sale of spectrum, expects to garner Rs 20,000 crore from the second round of auction to be conducted by the end of this fiscal. The November auctions had fetched only Rs 9,400 crore.

Non-tax revenues such as spectrum sale are essential for the government to bridge a part of its fiscal deficit, which is targeted to be capped at 5.3 per cent of GDP in 2012-13.