Floor price for spectrum auction fixed at Rs 14k crore

The Cabinet on Friday approved a reserve price of Rs 14,000 crore for 5 MHz pan India in 1800 MHz band as reserve price for the 2G spectrum auction.

This is the base price at which the telecom companies can start the bidding for the scarce natural resource and the actual or the final price will be arrived at once the auction is completed.

“The auction will give us a much better price. This is a signal to the industry that India means business and our policies are progressive. The auctioneer for the process will be appointed soon,” Telecom Minister Kapil Sibal told newsmen here.

Sources said the Cabinet approved levy of annual spectrum usage charge of 3 to 8 per cent on different slabs of revenue as was recommended by the EGoM headed by P Chidambaram.

Sibal said, “Now that the spectrum can be mortgaged with the banks, banks are also completely safe. Spectrum is a permanent asset.”

Earlier this year the Supreme Court had cancelled 122 licences stating that spectrum or airwaves used for mobile networks should be auctioned instead of being offered on a first come first serve basis.

It was Sibal who, sources said, pushed for the figure of Rs 14,000 crore, while other members of the Cabinet were open to a higher amount.

On being asked why was the price much lower than what was recommended by the regulator Telecom Regulatory Authority of India (TRAI) to which Sibal said, “This is the price at which the auction would start and we are sure that the auction will give us a much better price. We want the revenues and the government means business.”

In the new round of auction slated for August 31, those companies whose licences were revoked as well as new players will be able to bid for the scarce natural resource.