Sistema Shyam demands Rs 1,816 cr base price for CDMA auction

Telecom operator Sistema Shyam Teleservices has demanded that the government fix CDMA spectrum reserve price at Rs 1,816 crore a megahertz, which is 2 per cent lower than the base price set for the last auction conducted in March, 2013.
Questioning telecom regulator TRAI's approach to fix higher price for CDMA spectrum in the next auction, Sistema Shyam in a letter to the Department of Telecom has requested to set base price of the airwaves at 80 per cent of final price achieved in auction in February this year for 1,800 Mhz band, widely known as 2G spectrum.
"The reserve price for 800 Mhz (CDMA) band should be 80 per cent of valuation for 1,800 Mhz spectrum band. Aberration in 1,800 Mhz market price based valuation of 800 Mhz band in Gujarat and Maharashtra circles may be corrected..." Sistema Shyam said in the letter.

The Telecom Regulatory Authority of India (TRAI) used the price of 900 Mhz band, in which mobile signals give double coverage compared to 1,800 Mhz, as the basis for determining 800 Mhz band in its February 22 recommendations.
Sistema Shaym said TRAI recommendations of higher base price compared to earlier fixed reserve price was unexpected as the regulator in September last year had recommended a sharp reduction in in reserve price for 900 and 1800 Mhz band on the basis of economic situation, financial duress, auction failure etc.
"The new recommended reserve price for 800 Mhz band in 47 per cent higher than the reserve price that was recommended for 900 Mhz spectrum band and 80 per cent higher than the reserve price recommended for 1,800 Mhz spectrum band," the company said.

On the other hand, TRAI had suggested up to 62 per cent cut in base price of 900 Mhz band price and 37 per cent for 1,800 Mhz band fixed by government for auction in March.

Sistema Shyam said that the recommended base price for CDMA spectrum is high due to incorrect valuation methodology used by TRAI which is based on winning price of 900 Mhz band.
"It may be noted that 900 Mhz band in fully harmonised throughout the world for 2G and 3G technologies but the same is not true for 800 Mhz band and hence these bands are not comparable in terms of valuations," the company said.

It added the companies operating in 900 Mhz have space for growing business by using airwaves in other bands like 1,800 Mhz (currently used for 2G service in India) and 2,100 Mhz (3G service) but the future growth path in 800 Mhz is restricted at present.
TRAI also used the logic of the possibility of providing 4G services in 800 Mhz band for high base price after some modification in available spectrum slots.
Sistema Shyam countered the logic saying that globally 1,800 Mhz is most widely used for LTE (4G) which has 270 deployments till date compared to only 5 deployments in 800 Mhz band.