India to re-run GSM auction with lower prices
Spring 2013 will see process for 1.8GHz licences which went unsold last month, along with 900MHz frequencies
Published: 14 December, 2012
After the partial failure of the November re-auction of 1.8GHz GSM spectrum in India, the federal cabinet has approved a new sale of the frequencies which went unsold - with a reduced reserve price.
The high base prices set last month were cited as the main reason why many bidders stayed away, and why frequencies in key metro areas, plus the CDMA allocations, went untaken. Now starting prices have been slashed by 30% for 1.8GHz licences in the Delhi, Mumbai, Karnataka and Rajasthan service 'circles', a federal minister said. These four areas received no bids in the November process.
The ministers also approved a proposal to include 900MHz spectrum in the new auction, likely to be in May 2013. The 900MHz band is already in use for GSM but licences are up for renewal starting in November 2014. The base price for one slot of 1.25MHz bandwidth in 900MHz has been fixed at twice the starting price for 1.8GHz.
The Department of Telecom plans to take back some 900MHz licences and replace them with alternative frequencies, although the cabinet has now decided to allow operators to retain at least 2.5MHz of the 900MHz spectrum, in line with similar processes in other countries, beyond 2014 to sustain service continuity. Previously the carriers would have been left with far smaller amounts, which they argued could have led to a poor experience for users. They will now be asked to pay the same price that emerges from the auction, to keep their frequencies beyond the renewal date.
Last month's auction was to reallocate licences that were cancelled by the Supreme Court after a scandal over corruption in the original sale in 2008. But the regulator fell on the wrong side of the balance between raising money for the government - which is seeking to control its deficit - and encouraging expansion of mobile services and a strong competitive environment for cellcos, both sadly lacking in Indian 2G.
The auction rerun raised only INR94.07bn ($1.71bn), far short of government targets of INR280bn. It is not yet clear whether the unsold CDMA frequencies will also be included in the new set of auctions.