Base price for 2G spectrum in 4 circles cut 30 per cent to Rs14,000 crore

The group of ministers (GoM) headed by finance minister P Chidambaram, set up to review the pricing of telecom spectrum, has recommended a 30 per cent reduction in the base price for mobile phone radio waves in the four telecommunication circles were no sale could be effected at the auction earlier this month.

The GoM has recommended a base price of Rs14,000 crore for the 1800 MHz band 2G spectrum for the four zones, against Rs18,000 crore fixed at the previous auction, officials sources said.

The government managed to garner a total of Rs9,407.00 crore from last month's re-auctioning of 2G spectrum involving 122 licences against the target of Rs40,000 crore, after service providers criticised the sale as too expensive and did not bid in four telecom zones, including the lucrative Delhi and Mumbai zones.

Government said the Rs14,000 crore base price for pan-India spectrum taking into account, among others, the fact that the reserve price was only the floor price, and that the final applicable one time charges for spectrum will be discovered through auction. Keeping the reserve price at a level would encourage the participation of more players in the auction;

The total government revenues from the auction will depend not only on the one-time charges for the spectrum, but also on the Spectrum Usage Charges (SUC).

In the year 2008, as per the existing policy, 2G start-up spectrum was assigned as per the provisions of the UAS license. No separate upfront charges were levied for allotment of 2G spectrum. However, annual spectrum usages charges are being levied as a percentage of Adjusted Gross Revenue (AGR), minister of state for communications and information technology, Milind Deora, informed the Rajya Sabha today.