Floor price for spectrum auction to be Rs 14,000 cr

Prime Minister Manmohan Singh chaired the meeting of the Cabinet that set the price. Telecom companies will also have to pay an annual spectrum usage charge ranging between 3 and 8 per cent on different slabs of revenue,as recommended by an empowered group of ministers headed by then home minister P Chidambaram.

The auction is crucial for companies like Sistema Shyam and Uninor as their licences were among the 122 cancelled by the Supreme Court in February this year,with the companies asked to wind up by September 7. Both Sistema and Telenor have served notices to the Indian government alleging breach of bilateral investment protection treaty after the court judgment.

The Cellular Operators Association of India representing the GSM players,including Bharti and Vodafone,expressed disappointment at the price set by the Cabinet,stating that it offers no real relief to the problem of tariff and affordability. “It does not present a viable business case for the industry and will gravely impact its sustainability and future expansion plans,” Norway-based Telenor,which owns Uninor as a joint venture with Unitech,said. “We register that the auction starting price is lower than the recommended amount,but we need to look very carefully at the details.”