The Department of Telecommunications (DoT) has accepted the Finance Ministry’s proposal to double the reserve price for spectrum to be auctioned for 3G telephony from Rs 2,020 crore to Rs. 4,040 crore. The industry is upset.
The move means that if five blocks of spectrum are put for auction, then government would be able to raise a minimum Rs 20,200 crore from private players, even if bidders quote the minimum reserve price. If state-controlled BSNL and MTNL match the bidding price as required, the government would garner a minimum of Rs. 24,240 crore –taking the two together as one national player.
Government sources said that the Communications Minister A Raja and Finance Minister Pranab Mukherjee on Friday agreed on the new reserve price and informed Prime Minister Manmohan Singh.
“We have not yet finalized the number of operators who would be allotted spectrum through the bidding process,” DoT Secretary Siddharth Behura told Hindustan Times. The sources said that five or six private players might be allotted the spectrum.
MTNL was the first company to launch 3G services in India as it was allotted spectrum on the condition that it would pay the fee at which spectrum is allotted to private players.
“The new reserve price will not have any impact on our business plan as this price would be amortised over a period of 10 years,” said R.S.P. Sinha, MTNL’s chairman and managing director. “We have factored in a higher price of spectrum in our business plan.”
“This (higher price) is disappointing because India is starved of broadband and the only way it can be delivered is through 3G,” said T.V. Ramachandran, director-general of the Cellular Operators’ Association of India (COAI).”
“The base price of Rs 4,040 crore for spectrum is quite on the higher side,” said Prashant Singhal, partner and telecom industry leader, Ernst & Young. “What this could do is restrict the bidding to the six biggest telecom operators.”