New Delhi: Telecom regulator TRAI today recommended a sharp 60 per cent cut in the floor price of mobile phone spectrum for an upcoming auction after two previous sales drew lukewarm response because of high reserve price.
TRAI made recommendations to the Government for the start or base price of auction of spectrum in 900 per megahertz (MHz) and 1,800 MHz bands used by GSM players to offer 2G, that remained unsold after two rounds of auctions in November and March.
It suggested a pan-India reserve price of Rs 1,496 crore per MHz in the 1800 band, down 37 per cent from the base price set in the previous auction, TRAI Chairman Rahul Khullar said. In the 900 MHz band, it recommended a reserve price of Rs 288 crore per MHz for Delhi, Rs 262 crore for Mumbai and Rs 100 crore for Kolkata.
These rates are about 60 per cent lower than the reserve price in the previous auction. The reduction in reserve prices follow the failed March auction, which drew just one bidder.
“We have reduced the reserve prices to make the auction successful,” Khullar said. “If you ask me if the previous prices were high, my short answer is yes.” “The approach has completely changed from the previous pricing regime,” he said.
TRAI also recommended scrapping of the policy of incumbents like Airtel and Vodafone automatically retaining part of their existing spectrum in the efficient 900 MHz band provided they paid a price determined by an auction of airwaves.
If the TRAI suggestion is accepted, Bharti and Vodafone, whose licences are due for renewal next year, would have to bid again for all the spectrum that they currently hold in the 900 MHz band.
Telecom Minister Kapil Sibal said the recommendations are reasonable and in recognition of market realities.
“We are very happy by and large with the positive nature of the recommendations... they are industry friendly and recognise the ground reality of the market... Not only will government get its revenue but market will also be able to purchase spectrum at reasonable prices,” he said.
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