Govt sweetens spectrum auction, low base price may bring revenue

Feb auction to offer a wide choice for telecom companies hit by declining margin

GN Bureau | December 31, 2014



Telecom operators can end 2014 with a prospect of getting more bandwidth at a lesser price in 2015. And the government can also hope for additional revenue, at least in principal, for the current financial year.

This is the result of Wednesday’s announcement by the telecom regulatory body TRAI which recommended Rs. 2,720 crore per megahertz for pan-India 3G spectrum as the base price – about 22 percent less than the previous auction. The regulator has also recommended putting additional 15MHz for auction that will be available from the defence ministry.

These recommendations are going to bring huge bonanza for the telecom operators, demanding lesser base price and availability of wide range of spectrum. The industry has been struggling due to declining margins and other issues.

The auction for 800, 900 and 1,800 MHz bands is expected to be held in February and department of telecom is also mulling auctioning 3G spectrum (2,100 Mhz) along with these three bands.

"The authority recommends that the reserve price for 2100MHz spectrum in each LSA (licence service area) should be...Rs. 2,720 crore," Trai said. The new price is about 22 percent lower than the previous auction of 2010.  The reserve price of Rs 3,500 crore was fixed in 2010 on the basis of CAG estimating notional loss figure of Rs 1.76 lakh crore in the 2G spectrum allocation case of 2008.

The process and method for measurements and tests to be carried out to ensure the required the roll-out of the 3G network should be finalised at the earliest but, in any case, no later than the conduct of the February 2015 auction, TRAI said.
It has also cut the network roll-out period. The telecom operators winning 3G spectrum in the upcoming auction should roll out network within three years from the time of getting the radiowaves. The period was five years in 2010.

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