EGoM seeks Trai call on 2G reserve price

The Empowered Group of Ministers (EGoM), which met on Wednesday to decide on the next round of 2G spectrum auction, has asked the Telecom Regulatory Authority of India (Trai) to submit its recommendation on the reserve price within 60 days.

“It was decided that on the issue of reserve price, the matter should be referred to Trai and we would request the Trai to give its recommendations before the end of 60 days because the government is very keen to move forward and sell the spectrum,” telecom minister Kapil Sibal said.

“When Trai makes a recommendation, the EGoM will meet and fix the reserve price and move forward so that all spectrum in all bands should be sold,” he said.

The minister also said that the process to finalise the notice inviting application will begin right away.

This auction is highly anticipated, coming after two failed auctions in November last year and March this year.

The two earlier auctions had failed to yield much-needed revenue to the government exchequer because of abnormally high reserve price.

Indeed, the November auctions could fetch the government barely Rs 9,400 crore against an expected Rs 40,000 crore.

What’s more, there were no takers for CDMA spectrum as the two players – Videocon and Tata Teleservices – which had submitted applications pulled out.

The government had then reduced the reserve price by 30% in the 1800 MHz band.

Even so, none of the players showed interest in the second round of the auctions, barring Sistema Shyam Teleservices (SSTL), which thus bagged the airwaves at the reserve price of Rs 3,639 crore for eight circles.

This EGoM was expected to further reduce the reserve price for spectrum auction in the 1800 MHz and 900 MHz bands. However, it has now referred the matter to Trai, which will come up with its recommendation in the next two months.

Telecom operators hailed the move.

The Cellular Operators Association of India (COAI), which represents the GSM telecom players, said it is hopeful Trai will adopt a fair and market-based approach to determine a reasonable reserve price keeping in mind the interests of the industry as well as other relevant stakeholders. It blamed the high reserve price of spectrum for the dismal performance in the earlier auctions.

“There have hardly been any capex investments in the sector for expansion of services and the sector has been witnessing a slowdown. In light of this, the decision

of EGoM to seek fresh recommendations from Trai on the reserve price of spectrum is a welcome step,” COAI said in a statement.

It also expressed willingness to share its views on the issue with Trai and assist the regulator through the consultation process to help arrive at the right price.

“COAI is of the opinion that the decision will pave way for a ‘robust and exhaustive’ consultative mechanism in arriving at the right reserve price which will fuel further growth of the Indian mobile telephony sector,” said Rajan S Mathews, director general, COAI.