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India panel fixes spectrum auction price for cabinet approval

A panel of Indian ministers Friday came to a decision on the starting price for a controversial auction of radio bandwidth and its recommendation will be sent to the federal Cabinet for a final decision in the next couple of weeks.

The panel has also decided to allow telecom companies to stagger over a period of 12 years the payment for the bandwidth they win through the auction, a senior government official with direct knowledge of the matter told reporters. The official declined to be named.

India is auctioning airwaves for basic mobile phone services after the Supreme Court this year revoked the telecom licenses of several companies, citing corruption in their allotment in 2008.

The auction, which needs to be completed by Aug. 31, is crucial for such companies as Norway's Telenor ASA, Russia's Sistema JSFC and also for local operators such as Idea Cellular Ltd., whose licenses have been ordered to be cancelled.

However, the ministerial panel tasked with ironing out various issues surrounding the auction has met several times without taking a final on the controversial issue of the starting auction price, leading to speculation of a delay in the spectrum sale.

The Telecom Regulatory Authority of India had originally recommended a base price of 36.22 billion rupees ($654.67 million) for the auction of one megahertz of spectrum in the 1800 MHz frequency band. A new entrant will need more than INR180 billion to launch pan-India operations for the minimum 5 MHz of bandwidth.

This is several times higher than the price at which India allotted licenses and bandwidth in the past, and has been opposed by mobile telephone operators, who say the high price will not only put pressure on their profits but will also force them to raise tariffs, making mobile phone usage expensive.

Telecom Minister Kapil Sibal, a member of the ministerial panel, confirmed that a final decision on the starting price had been taken, but didn't elaborate on whether the panel has favored a price that is lower than that suggested by the regulator.

Earlier Friday, Mr. Sibal said the panel will also recommend to the cabinet an annual fee that telecom operators would need to pay for using spectrum won through the auction.

Источник: Total Telecom

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