Published: 6 August, 2012
The Indian government has finally set the reserve price for the reauction of 2G spectrum, the most controversial aspect of what has been a tortured process. Bids for a nationwide licence for 5MHz of GSM spectrum in the 1.8GHz band will start at INR140bn ($2.5bn), which many players still think is too high.
However, at least the final decision is at the low end of the range of INR140bn to INR160bn recommended by a group of ministers last month - a group which itself cut the INR180bn sensationally suggested by regulator TRAI, which provoked a storm of protest from operators. The base price for CDMA spectrum in 800MHz is set slightly higher at INR182bn.
The new prices are still many times higher than those charged when the GSM spectrum was originally sold in a 'first come, first served' auction in 2008. Those licences were cancelled by the Supreme Court in February, amid accusations of a corrupt and unconstitutional process which prompted the resignation of the Telecoms Minister of the time.
The current minister, Kapil Sibal, said the government has allowed "liberal payment norms" for the auction to ensure that either local or foreign players can participate. Carriers can pay licence fees in instalments and the spectrum usage charge will be kept at between 3% and 8% of operator revenues. The auctions are due to commence on August 31, though many expect this Supreme Court deadline to slip.
The carriers will now have to decide whether to take part. Some will be rebidding for licences they previously bought in 2008 - and a few of those have even launched commercial services. One of those was Telenor's joint venture Uninor. A Telenor spokesperson told Reuters: "We register that the auction starting price is lower than the recommended amount, but we need to look very carefully at the details of this new recommendation and make a proper decision based on facts before we decide."
Others were more outspoken. Idea Cellular's managing director Himanshu Kapania said the reserve price "does not present a viable business case".