Reserve price of spectrum expected to be lower for December auction, indicates Sibal

NEW DELHI: The reserve price for the next round of spectrum auction slated for December will be lower than last time, Communications and Information and Technology Minister Kapil Sibal has indicated.

Sibal said this in a video message on the occasion of re-branding of the Cellular Operators Association of India.

“What will be set for floor price on which telecom operators will bid will be, I think, relatively lower for them to make competitive bids,” he said.

However, he said this would be finally decided by the inter-ministerial panel of the Telecom Commission. The Ministry will then send its views to the Empowered Group of Ministers, which will forward its recommendations to the Cabinet for the final decision.

Meanwhile, a separate Inter-Ministerial Committee formed for overseeing auction modalities has tentatively set 7-8 January 2014 to start the auctions.

The Telecom Regulatory Authority of India (TRAI) had recommended nearly 62 per cent reduction in base price of premium 2G spectrum and up to 37 per cent in case of radio waves freed from the cancellation of 122 licences, compared to the amount fixed for previous auction.

The Telecom Commission has sought clarity on explanations given by TRAI to lower reserve price and the next meeting of the Commission is scheduled for 29 October.

However, COAI is still not satisfied with the pricing. “India has become a case of limited spectrum quantum availability and high reserve price per MHz of spectrum,” COAI chairman and Idea Cellular MD Himanshu Kapania said.

He said that based on the April-June quarter revenues, the Indian mobile industry has grown to an estimated Rs 1,60,000 core or $ 27 billion.

“But the nation remains a global pygmy in revenue terms - a meager 2.3 per cent of estimated the global telecom revenue of $ 1.16 trillion. This is because Indian operators have sacrificed short term gains by offering among the lowest global tariffs,” Kapania added.

He said the internet penetration in India is still at an abysmal low level of just 4.9 per cent, against China's 17.2 per cent, Singapore’s 123.3 per cent, Japan's 113.1 per cent, and the US' 74.7 per cent, according to an ITU report in 2012.

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