EGoM discusses modalities of spectrum auction
The government of India may approach the Supreme Court for an extension of its August 31 deadline for the auction of telecom spectrum even as the reconstituted EGoM held its first meeting to decide on pricing of airwaves.
Telecom regulator TRAI, which made a presentation before the EGoM, said impact of its proposed sale price will be higher in metros.
The reconstituted Empowered Group of Ministers headed by Home Minister P Chidambaram deliberated on auction modalities for nearly three hours today but could not reach finality on the minimum or base price to be set for sale of airwaves.
Sources said the EGoM was of the view that the auction of spectrum is unlikely to be completed in the remaining 50 days to the August 31 deadline and an extension will be required.
In this regard, the government will approach the apex court, they said.
TRAI said the impact of its proposed minimum price of Rs 3,622 crore per unit of spectrum (MHz) on mobile phone call rates will be 15-30 paisa per minute in metros while in most other places it would be at least 15 paisa.
The impact suggested by Telecom Regulatory Authority of India (TRAI) is less than 100 per cent hike in call rates claimed by the operators.
The panel decided to approach the apex court to update it on the status of auction after finalising some parameters for auction, Telecom Minister Kapil Sibal said.
"We are moving as quickly as we can and we want to go to Supreme Court to demonstrate to them that as far as we are concerned we are ready with everything and some timeline that we have indicated in our meeting will be met," he said.
Sibal said that government will try its best to adhere to timeline given by the Supreme Court.
While the EGoM deferred decision on bidders making staggered payment for purchase of auction, it decided that airwaves can be mortgaged to raise finance.
Sibal said, "We will try to stick to the deadline of August 31. But we will inform Supreme Court about all what we have done. We had some discussion on the timeline. We have decided some parameters, which we will fulfil before we move to Supreme Court."
The EGoM also deferred decisions on staggered payment and network rollout obligations for decision later but decided that airwaves can be mortgaged for raising finance and banks will decide modalities to sell it case of payment failure.
"As far as mortgage of spectrum is concerned, in the event their is default and the spectrum is mortgaged with the bank... its the bank that will take care of auction. The architecture of auction will be discussed in consultation with DoT," Sibal said adding the panel may meet again on Monday or Tuesday.
Sibal said, "We will be probably meeting again on Monday or Tuesday."
TRAI presented Delhi as an example where on certain parameters "a tariff hike of 15 paise is required to substantially restore the pre-impact profitability position."
The regulator had recommended a minimum price for auction of spectrum of over Rs 3,622 crore for a unit of airwaves which amounts to over Rs 18,000 crore for a pan-India operation in case of a new entrant.
Trai has recommended to fix double of this amount as minimum price for the airwaves that existing telecom operators use to provide wireless services at the time of renewal of their licences.
"The foregoing analysis prompts the conclusion that the additional impact arising on account of the current recommendations would largely be neutralised by a tariff hike of 5 paise," TRAI said in its presentation.
Sibal said that EGoM will decide on the matters that will be referred to cabinet for final call.