Cabinet okays 30% cut in spectrum reserve price for 4 circles

Airwaves in Delhi, Mumbai, Karnataka and Rajasthan found no takers in last months auction as bidders found the prices too high.

Subsequently, a ministerial panel recommended a 30 per cent cut in the base or reserve price for spectrum in 1,800 mega-Hertz (MHz) band in the four circles.

The Cabinet, headed by Prime Minister Manmohan Singh, accepted the EGoM recommendation and approved auction of airwaves in the four zones at 30 per cent lower price, one of the participants said.

The reserve price for last month's sale per block in Delhi was Rs 693.06 crore, while the same for Mumbai, Karnataka and Rajasthan was fixed at Rs 678.45 crore, Rs 330.12 crore and Rs 67.08 crore respectively.

The Cabinet also gave its go ahead for auctioning spectrum in 900 MHz band in Delhi, Mumbai and Kolkata simultaneously with the sale of radiowaves in 1800 Mhz in these four circles.

Reacting to the development, Cellular Operators Association of India (COAI) said there needs to be transparency in how the reserve price is arrived at.

"Participating is not the problem. All our operators by and large especially when 900MHz is involved will be interested. The question is what is the right price, "COAI Director General Rajan S Mathews said.

The last 2G mobile phone spectrum auction was virtually a flop as government managed to garner bids worth just Rs 9,407 crore as against a minimum target of Rs 28,000 crore.

Compared to the 3G auction, which lasted 35 days and got Rs 67,719 crore, the last round of 2G spectrum auction held in November lasted just two days.

Mathews said: "We are concerned as to how the reserve price was arrived at. Why the 30 per cent reduction, why not 40, why not 50. So, there needs to be transparency and understanding how the reserve price was arrived at."

In last month's auction, 176 blocks were put to auction, of which 102 blocks were bid for and won. Bihar was the only circle, where the winning price was 9.22 per cent higher than the reserve price, while 17 circles went for the reserve price. The remaining four circles saw no takers.

None of the companies in fray bid for pan-India spectrum for which the reserve price was set at Rs 14,000 crore.

The government had put on auction more than half of the spectrum that was freed from Supreme Court in February this year cancelling 122 mobile permits issued by the then Telecom Minister A Raja to nine telecom companies in 2008.

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