Cabinet approves Rs 3,705 cr as base price for 3G auction

The Cabinet today approved a base price of Rs 3,705 crore per megahertz (MHz) for 3G spectrum auction, a move which would help the government garner over Rs 1 lakh crore along with sale of other mobile frequencies.

"Cabinet has approved a reserve price of Rs 3,705 crore per MHz for 2100 MHz band (which is used for 3G mobile services)," Telecom Minister Ravi Shankar Prasad told reporters here after the Cabinet meeting.

The reserve prices for other bands -- 800 MHz, 900 Mhz and 1,800 MHz -- have already been approved by the Cabinet for the auction, which is scheduled to start from March 4 along with the 3G spectrum band.

According to sources, the combined proceeds from auction of all the four bands are estimated by the government at over Rs 1,00,000 crore -- making it the biggest ever spectrum sale.

The inter-ministerial panel Telecom Commission had suggested a base price of Rs 3,705 crore per MHz as 3G spectrum base price for the auction scheduled for March 4.

The base price suggested by the Commission is around 11 per cent higher than what telecom firms paid for in the 2010 auction. It is also 36 per cent higher than sectoral regulator TRAI's recommendation of Rs 2,720 crore per Mhz.

The Cabinet in its meeting on January 5 had approved that 5 MHz in 2100 MHz band would be put up for sale in the upcoming auction but the pricing was not decided at that time.

The Defence Ministry has agreed to release 5 Mhz in 2100 Mhz band in 17 circles.

Last week, the Cabinet had approved swapping of 15 MHz of 3G spectrum between Defence and the Telecom Ministry. However, government will be able to provide it after completion of the harmonisation process.

The Telecom Ministry has proposed to exchange 15 Mhz spectrum it holds in 1900 Mhz band with same quantum of radiowaves held by Defence in 2100 Mhz.

The Cabinet has asked ministries involved in the process to complete harmonisation within a year.