The finance ministry has asked the department of telecommunications (DoT) to double the reserve price for pan-India 3G auction to Rs 4,040 crore from the current Rs 2,020 crore. It has also asked broadband wireless access (BWA) reserve price to be doubled to Rs 2,000 crore.
The move assumes significance since by now it is clear that no new, foreign telecom major is going to participate in the 3G spectrum auction, which has been postponed to January 30 from the earlier date of January 16. The government therefore wants to garner the highest possible revenue from the existing operators who all are sure to bid for 3G spectrum. However, now there’s every possibility that the auctions would be further postponed.
The finance ministry has also asked the DoT to bring the matter to the Cabinet after incorporating the revised reserve price. The issue may throw up a slight problem since any revision would require the matter to be referred to the Telecom Regulatory Authority of India (Trai).
The Cabinet Committee on Economic Affairs (CCEA) is also slated to look at the Trai proposal of levying an administrative charge of 2% on the highest bid on a recurring basis, which has subsequently been rejected by the telecom commission, the apex policy-making body of the DoT.
The Rs 2,020 crore reserve was also increased by DoT than what was earlier recommended by the Trai. Trai had suggested a reserve price of Rs 80 crore for metro and A circles, Rs 40 crore for B circles and Rs 15 crore for C circles. The DoT increased it to Rs 160 crore, Rs 80 crore and Rs 30 crore respectively. If the finance ministry’s proposal is now to be accepted these would need to be doubled.
The government was earlier looking to garner around Rs 40,000 crore from 3G spectrum auction. However, due to dim business prospects coupled with the international financial meltdown, DoT had revised the estimate downward to around Rs 30,000 crore.