The government fixed a floor or minimum price of Rs 14,000 crore for auctioning pan-India mobile-phone spectrum, a decision old telecom players termed as “disappointing” calling the rates too high. A meeting of the Union Cabinet, chaired by Prime Minister Manmohan Singh, agreed to price 5 MHz of airwaves in the 1,800 Mhz band at the lower end of the Rs 14,000 crore to Rs 15,000 crore reserve price band suggested by a ministers’ group. The price approved was 22 per cent lower than Rs 18,000 crore minimum rate suggested by sector regulator, TRAI. It was, however, 7 times higher than the price new companies had paid in 2008 to get spectrum from the then Telecom Minister A Raja. Cabinet also accepted the Empowered Group of Ministers (EGoM) recommendation of pricing 800 Mhz spectrum at 1.3 times the rate of 1,800 Mhz band airwave, Telecom Minister Kapil Sibal told reporters after the meeting. This translates into Rs 18,200 crore for pan-India spectrum.
Terming the decision as “disappointing”, Rajan Mathews, Director General of Cellular Operators Association of India (COAI) — a body of GSM operators like Airtel and Vodafone, said the move would lead of a 30 paisa per minute increase in mobile phone tariffs. “The effect on finances is that an amount of Rs 320,000 crore of additional debt that will have to be laid on the industry,” he said. Cabinet also approved annual fee on spectrum, called spectrum usage charges, at existing rate which varies between 3 to 8 per cent of revenues earned by companies. Asked if the government would be able to meet the August 31 deadline mandated by Supreme Court for auctioning of the spectrum freed from its order cancelling licences of 122 operators, Sibal said the EGoM is likely to meet on Monday.
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