The Cabinet Thursday approved a 30 percent cut in the reserve price for sale of mobile phone spectrum in four zones that went unsold in the recent damp-squib auction.
New Delhi: The government Thursday cut by 30 percent the reserve price for mobile phone airwaves in four zones that went unsold in all-India spectrum sale last month.
Airwaves in Delhi, Mumbai, Karnataka and Rajasthan found no taker in the auction as bidders found the prices too high.
"The reserve price for 1800 MHz band in the service areas of Delhi, Mumbai, Karnataka and Rajasthan be reduced by 30 percent from the previous reserve price," an official statement said citing a decision taken by the Union Cabinet at its meeting this evening.
The government also fixed the reserve price for spectrum in 900 MHz band, which will be auctioned simultaneously with 1800 Mhz airwaves in Delhi, Mumbai, Karnataka and Rajasthan.
The spectrum in 900 MHz will be auctioned in Delhi, Mumbai and Kolkata.
The reserve price in last month's auction was Rs 693.06 crore for Delhi circle, Rs 678.45 crore for Mumbai, Rs 330.12 crore for Karnataka and Rs 67.08 crore for Rajasthan.
The new base price after 30 percent cut would be Rs 485.142 crore for Delhi, Rs 474.915 crore for Mumbai, Rs 231.084 crore for Karnataka and Rs 46.956 crore for Rajasthan.
"The reserve price for 900 MHz spectrum in Delhi and Mumbai be twice the revised reserve price for the 1800 MHz and in Kolkata be twice the price obtained for the 1800 MHz band for this service area in the auction held in November, 2012," it added.
With regard to payment of spectrum currently held in 1800 and 900 MHz bands by existing operators in the four service areas where auction determined price is not available, it has been decided that such operators be charged at the revised reserve price, on the applicable quantum of spectrum, till such time as auction determined price becomes available.
"After the auction price becomes available, the earlier payment made on the basis of reserve price would be adjusted against the amount actually due," it added.
Reacting to the development, Cellular Operators Association of India (COAI) said there needs to be transparency in how the reserve price is arrived at.
COAI Director General Rajan S Mathews said: "Participating is not the problem. All our operators by and large especially when 900MHz is involved will be interested. The question is, what the right price is."
The last 2G mobile phone spectrum auction was virtually a flop as government managed to garner bids worth just Rs 9,407 crore as against a minimum target of Rs 28,000 crore.
Compared to the 3G auction, which lasted 35 days and got Rs 67,719 crore, the last round of 2G spectrum auction held in November lasted just two days.
Mathews said: "We are concerned as to how the reserve price was arrived at. Why the 30 percent reduction, why not 40, why not 50. So, there needs to be transparency and understanding how the reserve price was arrived at."
Mathews further said the issue should be sent back to Trai for reconsideration and a comprehensive review.
"In case it does not happen, we will wait for the final (auction) guidelines and examine if it has violated any of our legal rights," he said.
In last month's auction, 176 blocks were put to auction, of which 102 blocks were bid for and won. Bihar was the only circle, where the winning price was 9.22 percent higher than the reserve price, while 17 circles went for the reserve price. The remaining four circles saw no takers.
None of the companies in fray bid for pan-India spectrum for which the reserve price was set at Rs 14,000 crore.
The government had put on auction more than half of the spectrum that was freed from Supreme Court in February this year cancelling 122 mobile permits issued by the then Telecom Minister A Raja to nine telecom companies in 2008.