Cabinet okays lower base price for January 2G auction

The Indian cabinet on Monday approved the reserve price for the auction of 2G telecom spectrum, keeping it 25.8 per cent lower than the previous auction, as suggested by the empowered group of ministers (EGoM) on telecom.

The EGoM, headed by finance minister P Chidambaram, had decided on 22 November to lower the base price for of pan-India spectrum in the 1,800-MHz band at Rs 1,764.79 crore for 1 MHz. The auction scheduled in January.

For the auction in March this year, the government had set the base price for 1 MHz of pan-India spectrum in the band at Rs2,379 crore. The EGoM had taken the decision based on the suggestions of the Telecom Commission.

''The decisions will result in further efficient utilisation of the scarce natural resource of spectrum facilitating expansion of telecom services in the country,'' the government said in a statement.

In November, communications and information technology Minister Kapil Sibal had said the government would garner between Rs30,000 crore and Rs40,000 crore from the auction, the one-time fee and other charges in the financial year.

The base price for the same spectrum was about 37 per cent higher in the November 2012 auction, which elicited a muted response from telecom operators (See: 2G auction ends with only Rs9,400 cr garnered). Following that, the government had reduced the price by about 30 per cent for March but it failed to get any bidder.

The government will conduct the auction for all 22 circles in the 1,800-MHz band and in Delhi, Mumbai and Kolkata in 900-MHz band. For the 900- MHz band, it approved a rate about 53 per cent lower than the previous auction price.

The reserve price for one MHz spectrum in 900-MHz band will be Rs360 crore in Delhi, Rs328 crore in Mumbai and Rs125 crore in Kolkata. Licences will be due for renewal in November 2014 in these three circles.

The EGoM has also decided to auction 403 MHz of spectrum in the 1800-MHz band, which is about 41 per cent more than what the government had actually proposed earlier.