The Empowered Group of Ministers will ask the telecom regulator to review the reserve price for spectrum auction. The Group, which met on Wednesday to decide on future course of spectrum auction, has asked telecom regulator TRAI to recommend the price within 60 days. This comes after two rounds of auction failed to attract bidders owing to the high reserve price.

The price is crucial not only for the next round of auction but also for fixing the one time fee to be paid by incumbent operators and the licence renewal fees at the end of the 20 year licence period.

Right direction

Telecom industry said that the EGoM decision was a step in the right direction although it may delay the entire process.

Himanshu Shah, analyst at HDFC Securities, said in a report, “Assuming, TRAI reduces the reserve price significantly, it would be important telecom firms doesn’t overbid. This looks likely due to stretched balance sheet and the learning from 3G auction.”

S.C. Khanna, former Secretary-General of the Association of Unified Telecom Service Providers of India, said, “The EGoM has done the right thing by asking the TRAI to re-look at the reserve price. This allows the stakeholders to make their case better,” said Khanna.

Plan panel views

The EGoM’s decision is in line with the Planning Commission’s views. The Commission had warned that the Government’s credibility will be adversely impacted if the next round of spectrum auction also fails to attract bidders. The Commission had recommended that instead of arbitrarily reducing the reserve price of spectrum, the Government should seek the views of the TRAI for the next round of auction.

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