Will 2G rates be in sync with 3G bids?

The Telecom Regulatory Authority of India (Trai), which is all set to issue recommendations on 2G (second generation) spectrum, may have had to rework on its paper following the high 3G (third generation) bids.

The Trai recommendation is expected to talk about the price of 2G spectrum for additional allocation to telcos.

As per the current norms, startup 2G spectrum is given to
telcos, along with the licence for a pan-India price of Rs 1,650 crore.

While additional spectrum allocation is based on the number of subscribers that a company has, that practice is likely to change after Trai recommendations.

Sources pointed out that Trai may like to benchmark the 2G spectrum price (for additional allocation) against the ongoing 3G bid rates. Communications minister, A Raja, has been under attack from political parties, for giving out pan-India 2G spectrum to several companies in the recent past at just Rs 1,650 crore on a first come first serve basis rather than opting for the auction route.

Meanwhile, it’s not the telecom companies alone that are rattled by the high bidding in the 3G (third generation) spectrum auction, sources said that officials in the Department of Telecommunications (DoT) too are finding the bids unexpectedly high.

It is learnt that before the auction, DoT had estimated that the
pan-India winning price for a 3G slot would be around Rs 7,500 crore. But after 15 days of 3G bidding, the pan-India winning price stood at Rs 8,662.45 crore, and the auction is nowhere near the closing line yet. This is against the pan-India reserve price of Rs 3,500 crore.

Tuesday’s highest pan-India bid price of Rs 8,662.45 crore was 147.4% more than the reserve price. Also, Mumbai drew the highest bid among all the circles at Rs 1,329.34 crore, which is 315.4% more than the reserve price of Rs 320 crore in A Circle.

Delhi drew the second highest bid at Rs 1,284.04 crore, which is 301.2% more than the reserve price.