The Cabinet today approved a 50 per cent cut in the auction reserve price for CDMA spectrum. The decision could prompt Russia's Sistema to participate in the auction process schedule for March.
The Cabinet today approved a 50 per cent cut in the auction reserve price for CDMA spectrum. The decision could prompt Russia's Sistema to participate in the auction process schedule for March although the company said the reduction was not enough.
“The decision by the Cabinet to reduce the CDMA reserve price by 50 per cent clearly reflects the growing realisation that demand for 800Mhz is very limited. The decision taken is a step in the right direction. However, as per ground realities, one would have expected much greater reduction,” said a Sistema Shyam spokesperson.
No bids received
Earlier, the Empowered Group of Ministers (EGoM) had recommended 30-50 per cent cut in the reserve price for CDMA airwaves in the 800 Mhz band. The Cabinet decision comes after the Government failed to receive any bid for this spectrum band in the auction held in November. Telecom companies had blamed the high reserve price for their staying away.
Now, the Government wants to hold another round of auction with a lower base price.
While the earlier auction had started at Rs 18,000 crore for 5 Mhz of CDMA spectrum, this is now be lowered to Rs 9,000 crore.
Russian major Sistema may benefit the most from the Cabinet's decision as its Indian venture’s pan-India CDMA licence is set to get cancelled on February 4. The lowered price could mean that Sistema Shyam will be able to buy back the spectrum for an additional Rs 4,500 crore for 2.5 Mhz of pan-India CDMA spectrum.
If the Government adjusts the Rs 1,650 crore paid earlier, Sistema's cost of acquiring spectrum would go down further.
GSM spectrum
The reserve price for the 1,800 Mhz and 900 Mhz spectrum bands have already been reduced by 30 per cent. These two bands are used by GSM operators. The Government had not received bids in the four circles of Delhi, Mumbai, Rajasthan and Maharashtra for the 1,800 Mhz band.
All these bands will be put on the block in the auction from which the Government is expecting to raise Rs 25,000 crore.