GSM mobile operators are disappointed with the Telecom Commission’s proposal to increase the reserve price for the next round of spectrum auction from the amount recommended by TRAI in September.
While the telecom regulator had suggested a base price of Rs 1,496 crore for 1 MHz of pan-India spectrum in the 1800 MHz band, the Commission, the highest decision-making body in the Department of Telecom, on Wednesday pegged the price at Rs 1,763 crore.
The higher price for pan-India spectrum is due to a 25 per cent increase in the reserve fee for eight circles, including metro and category A circles such as Maharashtra, Andhra Pradesh and Tamil Nadu. The Commission has, however, accepted the reserve price suggested by TRAI for the remaining 14 circles in the 1800 MHz band.
In the 900 MHz band, the Commission has proposed to increase the reserve price by 25 per cent in Delhi, Mumbai and Kolkata. This frequency band is currently held by incumbent operators whose licence is set to expire next year. A higher base price would mean that players such as Bharti Airtel Ltd, Vodafone India Ltd and Idea Cellular Ltd will have to pay more if they want to retain this spectrum band.
“The telecom department has not explained how it arrived at a higher reserve price. If accepted, the new price could mute the bidding,” said Rajan Mathews, Director General, Cellular Operators Association of India.
Impact may be limited
However, the proposed pricing may not be fatal for the next round of auction because it is much lower than the last round of auction held in March.
“Telecom companies would have liked the TRAI price but even a small increase in the 1800 MHz band will not have much of a negative impact,” said Prashant Singhal, Global Telecom Markets Leader, EY. “But a 25 per cent increase in the 900 MHz band can be significant.”
Mobile companies using CDMA technology are, however, relieved with the Telecom Commission’s decision on auctioning the 800 MHz band. TRAI had wanted the 800 MHz band to be used for GSM services but the Commission has taken the view that this band should also be put up for auction. This will benefit players such as Sistema Shyam, which wanted to increase its current spectrum holding to offer data services.
“The reserve price for 800 MHz should be decided quickly. There should not be any further delay and we want this band to be auctioned simultaneously with other bands,” said Ashok Sud of the Association of Unified Telecom Service Providers.