2G auction: EGoM for up to 50% cut in CDMA base price

2G auction: EGoM for up to 50% cut in CDMA base price

 PTI   New Delhi     Last Updated: January 7, 2013  | 19:05 IST

An Empowered Group of Ministers (EGoM) on Monday recommended reducing minimum price for sale of spectrum used by CDMA mobile operators by up to 50 per cent in the second round of auction planned to begin on March 11 to raise a minimum of Rs 45,000 crore.

The EGoM headed by Finance Minister P Chidambaram recommended to the Cabinet that the reserve or the starting price, for the airwaves be cut by 30 to 50 per cent, officials who wished not to be identified said.

The Cabinet will take a final call on the spectrum price.

The auction for the 1,800 MHz second-generation phone spectrum in four markets, including New Delhi and Mumbai that went unsold in the November 2012 auction, will start March 11, Telecom Minister Kapil Sibal said.

The government will sell 800 MHz and 900 MHz spectrum after the GSM auction, he said.

About 70 per cent of the airwaves went unsold in the November auction that raised Rs 9,410 crore, less than 25 per cent of the amount the government was targeting to raise from spectrum sale this fiscal.

The EGoM had last month recommended a 30 per cent cut in reserve or base price for the second-generation spectrum that wasn't sold in the auction.

The Cabinet may decide this month on the minimum price for the 800 MHz sale, Sibal said.

The November auction of CDMA spectrum (800 MHz) did not attract bidders due to high reserve price. The reserve price set was 11 times higher than what operators paid in 2008.

Back-of-the envelope calculations showed that if the government cuts CDMA spectrum price by 30 per cent, the auction of 800 Mhz together with 900 Mhz and 1800 Mhz airwaves would get up to Rs 48,000 crore. If the reserve price reduction is 50 per cent, it will get about Rs 45,000 crore at the base price.

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