3G auction : Trai moots 22% lower base price

2010 auction had fetched the exchequer Rs 67,700 cr

The Telecom Regulatory Authority of India (Trai) on Wednesday recommended a base price of Rs 2,720 crore a megahertz (MHz) for 2,100-MHz spectrum across the country (22 telecom zones). The price is about 22 per cent lower than the reserve price of the same spectrum in the previous auction, conducted in 2010.

For the 2010 auction, the reserve price for the 2,100-MHz band was fixed at Rs 3,500 crore a MHz. This helped the exchequer collect about Rs 67,700 crore.

Trai has also suggested spectrum in the 2,100-MHz band be put up for auction along with that in other bands — 800, 900 and 1,800-MHz —scheduled to be auctioned in February.

The authority has kept the price for the 2,100-MHz band about 14 per cent lower than the price it had recommended for the 800-MHz band. The price is, however, lower than for 900 MHz, though it is much higher than the base price for the 1,800-MHz band.

Earlier, Trai had recommended a base price of Rs 2,138 crore per MHz for 1,800-MHz spectrum (in 20 circles), Rs 3,004 crore per MHz for 900-MHz (18 circles, where existing licences will be due for renewal), and Rs 3,104 crore per MHz for 800-MHz spectrum (pan-India).

In a statement, Trai has said, “The 15 MHz of spectrum in the 2,100-MHz band being vacated by the Ministry of Defence (MoD), in lieu of spectrum in the 1,900-MHz spectrum, should be auctioned in view of the in-principle agreement reached with the MoD, even if it is not available immediately. This is because actual assignments do not have to be made immediately. The actual date of assignment may be given in the notice inviting applications.”

The DoT and the defence ministry are negotiating the swap of spectrum, and availability of spectrum in the 2,100-MHz band is yet to be announced.

Trai’s recommendations will now be deliberated by the DoT and, subsequently, the Telecom Commission will decide the final price. The reserve price decided by the regulator is highest for the Delhi circle (Rs 446 crore per MHz), followed by Mumbai (Rs 340 crore), Karnataka (Rs 241 crore) and Tamil Nadu (Rs 260 crore).

Trai has recommended in the coming auction, no one be allowed to bid for more than two blocks in a service area if three-four blocks are available in the service area concerned. “If any telecom company is assigned two blocks of 2x5 MHz in the 2,100-MHz band in the coming auction, it should be assigned contiguous carriers alone,” it added.

Further, the authority has suggested operators be allowed to realign their spectrum-holding among themselves.

In the Budget estimate for 2014-15, the government had projected revenue receipts from the coming auction, which will include sale of airwaves in the 800-MHz, 900-MHz and 1800-MHz bands, at Rs 9,355 crore. According to estimates, auction of spectrum in the 2,100-MHz band in February will fetch bids worth at least Rs 5,000 crore.

The projected figure seems to be conservative, considering the auction in February this year generated a total bid value of Rs 61,162.22 crore. At that time, 46 MHz of airwave in the 900-MHz band and 307 MHz spectrum in the 1,800-MHz band was sold. While operators chose not to comment on the Trai recommendations, analysts said there was scope for the prices to be lowered. “This will increase participation and lead to a more successful auction. Let the market determine the price,” said an analyst with a consulting firm.