Spectrum auction: EGoM unlikely to reduce the reserve price for airwaves

NEW DELHI: The panel of ministers on spectrum headed by Pranab Mukherjee is unlikely to reduce the reserve price for airwaves in the upcoming auctions despite intense criticism and lobbying from mobile phone companies.

The nine-member Empowered Group of Ministers (EGoM) headed by the finance minister, in its June 5 meeting, added a new clause to the auction parameters, stating that the objective of the sale process will be to 'maximise revenue proceeds'. ET reviewed a copy of the minutes of EGoM's June 5 meeting.

Executives with two different mobile phone companies, who declined to be named, said new clause of maximising revenues may force the EGoM to stick with the minimum price recommended by Trai.

The panel of ministers, during the same meeting, had decided to sell up to 13.75 MHz of spectrum in the 1800 MHz band in the upcoming auctions. But, the EGoM did not take a call on the reserve price for spectrum that will be sold in the auctions.

It is slated to meet again later this month to finalise the minimum price. The government can garner a minimum of 49,800 crore if 13.75 MHz of airwaves are sold at the Trai-recommended price.

Telcos have slammed Trai's recommendations on the pricing of airwaves and have repeatedly warned that call tariffs could go up by over 100% if the government approves the steep hike in spectrum costs.


The EGoM had approved the plan of telecom department to sell a minimum of 10 MHz of airwaves with an option to add another 3.75 MHz based on the demand.

The airwaves will be sold in blocks of 1.25 MHz where new entrants including companies such as Telenor and Etisalat (whose licences were quashed by the SC) could buy a maximum of four blocks (5 MHz) and incumbents such as Bharti and Vodafone could buy up to two blocks in the 1800 MHz band.

In the CDMA space, the likes of Sistema that lost its permit due to the SC order can bid for a maximum of two blocks, while incumbents such as Tata Teleservices and Reliance Communications can buy only one block or 1.25 MHz of airwaves in the 800 MHz band.

The minutes further add that all airwaves allotted in this auction will be technology-neutral, and it will be up to the winner to decide whether it wants to offer 2G, 3G or 4G services on these frequencies. This concept is known as liberalisation of airwaves.

The EGoM also decided that existing players could convert all the airwaves they have in the 1800 MHz band into 'liberalised spectrum for a period of 20 years on payment of the auction determined price'.

"However, period of 20 years will be subject to licensee acquiring Unified Licence on expiry of existing licence. The entry fee already paid may be adjusted on pro-rata basis only on one occasion when the licensees convert their spectrum into liberalized spectrum," the minutes of the meeting added.