The report stated that this 24 blocks will include 12 blocks of 1.25 MHz in the 1800 MHz spectrum band and 12 blocks of 1.25 MHz in the 900 MHz spectrum band. This is a significant increase from eight blocks which was put up on sale in the recently concluded 2G auctions.
It also added that operators will be allowed to buy at least four blocks of 1.25 MHz in the forthcoming auction, going up to 25% of the total spectrum being put up for sale. In the previous auction, the operators were limited to purchase only five blocks of 1.25 MHz spectrum.
Existing Operators as New Players?
What’s particularly interesting is that the report suggests that existing operators whose licences are up for renewal in 2014 are being considered as new players, according to draft guidelines of the auction, mandating them to bid for a minimum of four blocks in both 1800 MHz and 900 MHz band in the lucrative Delhi and Mumbai circles and allowing them to purchase more than five slots of spectrum in the auction.
Note that we weren’t able to locate any such draft proposal on the DoT website at the time of writing this article, but this move is expected to affect existing operators like Airtel, Vodafone and Idea Cellular, who might be forced to participate in the auctions to retain their licenses in Delhi and Mumbai circles, as indicated by a FirstPost report.
Lowering of Reserve Prices
This follows the empowered group of ministers (EGoM) decision to lower the reserve price by 30% for the Delhi, Mumbai, Karnataka and Rajasthan circles in 1800 MHz band last week, after these circles didn’t attract any bidders in the 2G auction due to high pricing. Following the reduction, the government had set a new reserve price of Rs 12,000 crore for a block of 5 MHz of spectrum in the 1800 MHz band on a pan-India basis, as against Rs 14,000 crore prior to the auction.
Circle-wise, the new reserve price for Delhi was set at Rs 485 crore as against Rs 693.06 crore prior to the auction, while the new reserve price for Mumbai was set at Rs 475 crore as against Rs 678.45 crore earlier. The new reserve prices for Karnataka and Rajasthan stood at Rs 231 crore and Rs 47 crore respectively, as against Rs 330 crore and Rs 67 crore earlier. Telecom minister Kapil Sibal had stated that they were currently seeking the cabinet’s approval on this reduced pricing and they plan to complete the auction process by the end of this financial year.
900 MHz Spectrum Auction
Sibal had also mentioned EGoM’s decision to auction spectrum in the 900 MHz band in Delhi, Mumbai and Kolkata and had stated that both the auctions will be conducted simultaneously. However, he hadn’t disclosed any base price of the spectrum in these circles. The Business Line report however suggests that the government has set a reserve price of Rs 970.3 crore per block for the Delhi circle, Rs 949.84 crore per block for Mumbai circle and Rs 227.44 crore per block for the Kolkata circle, which is almost double of the reserve prices in the 1800 MHz spectrum band.
– EGoM Reduces 2G Reserve Prices By 30% in 4 Circles
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– India Sets 2G Spectrum Auction Reserve Price At $2.5 Bn For GSM, $3.2 Bn For CDMA; Timeline
– EGoM Sets 20% Lower Base Spectrum Price; CDMA Spectrum To Cost 1.3 Times More
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