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3G auction : Trai moots 22% lower base price

The Telecom Regulatory Authority of India (Trai) on Wednesday recommended a base price of Rs 2,720 crore per megahertz (MHz) for 2100MHz spectrum in 22 telecom zones. The regulator reiterated its earlier suggestion that spectrum in the 2100MHz band should be auctioned along with other bands – 800, 900 and 1800MHz – that are scheduled for February 2015.

Trai has kept the price for 2100MHz band about 14% lower than the price it had recommended for 800MHz band. However, the price is lower than 900MHz, but is much higher than the base price of 1800Mhz band.

Trai had earlier recommended the base price for 1800MHz spectrum at Rs 2,138 crore per MHz (in 20 circles), 900MHz at Rs 3,004 crore per MHz across 18 circles where existing licences will be due for renewal, and 800MHz spectrum at Rs 3,104 crore per MHz pan India.

In a statement, Trai has said that the Department of Telecommunications (DoT) should auction 2100MHz band of spectrum along with 800, 900 and 1800Mhz bands in February. “The 15 MHz of spectrum in the 2100 MHz spectrum being vacated by Ministry of Defence, in lieu of spectrum in the 1900 MHz spectrum, should be auctioned in view of the in-principle agreement reached with MoD, even if it is not available immediately. This is because actual assignments do not have to be made immediately. The actual date of assignment may be given in the notice inviting applications (NIA),” Trai noted.

The DoT and Defence are still negotiating about the swap of spectrum, and availability of spectrum in the 2100MHz band is yet to be announced.

According to Trai recommendations, in the upcoming auction no bidder would be permitted to bid for more than two blocks in a service area if 3-4 blocks are available in that LSA. “If any telco is assigned two blocks of 2×5 MHz in the 2100 MHz band in the upcoming auction, it should be assigned contiguous carriers only,” it added.

Furthermore, the authority has suggested that telecom operators should be permitted to realign their spectrum holding amongst themselves with mutual agreement.

In the Budget estimate for 2014-15, the DOT has projected revenue receipts from the upcoming auction, which will include the sale of airwaves in the 800-MHz, 900-MHz and 1800-MHz bands, at Rs 9,355 crore.

The projected figure is far too conservative, considering the successful auction that generated a total bid value of Rs 61,162.22 crore in February by selling 46MHz of airwave in the 900MHz band and about 307MHz spectrum in the 1,800MHz band.

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