2G auction: EGoM nod to deferred payment scheme

On the reserve price the EGoM has presented a range of options

Written by ENS Economic Bureau | New Delhi | Published:July 21, 2012 12:41 am

Mobile operators interested in participating in the forthcoming 2G spectrum auction can look forward to some relief as the empowered group of ministers (EGoM) on Friday approved the deferred payment scheme as suggested by the Telecom Regulatory Authority of India (Trai).

Interestingly,the scheme was rejected by the Telecom Commission,the highest policy-making body on telecom-related matters. The matter would now go to the Cabinet for final ratification.

On the reserve price,the EGoM has presented a range of options for the Cabinet to decide on.

Although no official confirmation was available,sources said that the ministerial panel has suggested a range between Rs 14,000 crore and Rs 16,000 crore.

In this case the spectrum usage charge would vary between 7 per cent and 5 per cent of the adjusted gross revenue of the operators. Trai had suggested a reserve price of Rs 18,110 crore for

5 MHz spectrum across the country with a spectrum usage charge of 3 per cent. However,the EGoM at its last meeting had asked the department of telecommunications to provide a matrix by successively reducing the reserve price by Rs 1,000 crore and increasing the spectrum usage charge by 1 per cent.

The idea was to reduce the upfront payment component by operators since usage charge is paid over a 20-year period based on revenues.

The issue of a one-time levy on incumbent operators for the spectrum they hold was not taken up for discussion on Friday and would be decided by the EGoM later.

Government sources said that the deferred payment scheme that has been approved is broadly on the lines suggested by Trai where for the 1,800 MHz (GSM) band spectrum an initial payment of 33 per cent of the bid amount needs to be made. There would be a moratorium for the next two years and the balance amount can be paid over the next 10 years in equal instalments. For spectrum in the 800 MHz (CDMA) band the initial payment would be 25 per cent of the bid amount.

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