The government has approved the reserve price and increased the quantum of spectrum to be auctioned in the forthcoming spectrum auction as suggested by the Empowered Group of Ministers (EGoM). In addition, it has also approved the merger and acquisition (M&A) policy.
Earlier, the EGoM had suggested increasing the reserve price of spectrum in the 1,800 MHz and the 900 MHz band by 18 per cent and 25 per cent over and above the reserve price recommended by the Telecom Regulatory Authority of India (TRAI). With the government accepting the proposals of the EGoM, the reserve price of spectrum in eight circles – Delhi, Mumbai, Kolkata, Chennai, Maharashtra, Gujarat, Karnataka, and Tamil Nadu has increased by 25 per cent.
However, for the rest of the 14 circles, the government has decided to adhere to TRAI?s recommendations. Consequently, the pan-India reserve price for spectrum to be auctioned in the 900 MHz band has increased by 18 per cent from
Rs 14.96 billion to Rs 17.63 billion per MHz. With the government taking a call on the reserve price of spectrum in the 900 MHz band, the final reserve price for spectrum to be auctioned in the Delhi, Mumbai and Kolkata circles stands at Rs 3.59 billion, 3.27 billion and Rs 1.25 billion, respectively.
In addition, the government has also approved the proposal to auction 403.2 MHz of 2G spectrum in the 1,800 MHz band. As per the timeline suggested by the Department of Telecommunications, the next round of spectrum is expected to be begin on January 21, 2013.
Besides approving the reserve price for the spectrum auction, the government also approved the revised M&A norms. As per the approved M&A policy, the resultant entity will have to pay the market price for holding spectrum above 4.4 MHz ie 2.5 MHz each that was allotted against an entry fee. However, if the two entities which are merging hold spectrum acquired through the auction process, they will not have to pay the market price for the spectrum.
