The inter-ministerial Telecom Commission has recommended that the reserve price for auction of airwaves in the prized 900 Mhz and 1,800 Mhz bands be raised by up to 25 percent. The government can now plan for the auction in this fiscal to earn at least Rs 11,000 crore. This will be the third auction for airwaves after the Supreme Court asked for them,but it will be far more significant than the earlier two auctions in which very few companies participated due to the high reserve price. For the government,the auctions will be a source of major non-tax revenue in FY14 to ensure its target of fiscal deficit at 4.8 per cent of GDP is maintained. The Telecom Commission has asked for a 15 per cent mark-up on the reserve price recommended by Telecom Regulatory Authority of India (Trai) for the 1800 Mhz band and for a 25 per cent mark-up on the more valuable 900 Mhz band. The commission’s decisions will now be sent to the Empowered Group of Ministers for a decision. Telecom Secretary M F Farooqui told reporters,“We have taken a decision on the pricing for 1,800 and 900 Mhz and also for mergers and acquisitions.” The commission has,however,left undecided the reserve price for the auction of the 800 Mhz band and charges for spectrum usage. A sector analyst said the auction might be difficult to execute without resolving these issues. The industry reacted along expected lines. The GSM group comprising companies like Bharti and Vodafone said it was disappointed. “The increase would ensure that no new telecom player bids for spectrum. The participation from existing telecom operators would also be muted,as there are limitations to funds one can put for auctions,” Rajan Mathews,director general of the Cellular Operators Association of India told The Indian Express. CDMA operator SSTL welcomed the commission’s decision to auction the 800 Mhz band. SSTL was the only company that participated in the March auction for the 800 band. The Telecom Commission also approved the M&A policy,allowing mergers with a combined market share of up to 50 per cent. This would replace the current cap of 35 per cent market share of the combined entity. Companies will be allowed to retain two blocks of 3G spectrum in the respective areas after the merger.
