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Learning lessons from the flop spectrum auctions held in November last year, an Empowered Group of Ministers (EGoM) on spectrum has proposed a 30-50 percent cut in the reserve price of 800MHz band used for CDMA-based mobile services. The auction for the CDMA band will be held in March this year.
While talking to the media after the EGoM meet, Union minister Kapil Sibal said the bidding for the 800 MHz band will be held in all the circles.
"Cabinet will decide on CDMA spectrum price cut. The auctions will begin on March 11,” Economic Times quotes a source as saying.
The proposal to cut the base price comes months after the government failed to auction the CDMA spectrum at 1.3 times higher reserve price than that of the GSM spectrum in 1800MHz band. For pan-India the base price for 5MHz of spectrum in 1800 MHz band was set at Rs. 1,400 crore.
The auction fell flat with the government only garnering Rs. 9,407 crore from the last round of spectrum, as against an expected Rs. 28,000 crore. Several players chose to stay away from the bid due to high prices. As per an estimate, the telcos may suffer a blow of over Rs. 1.15 lakh crore due to refarming of 900 MHz spectrum.
Back in February 2012, the Supreme Court had cancelled as many as 122 telecom licences issued under a scam-tainted 2008 sale. The cancellation included Sistema Shyam Teleservices' CDMA licences in 21 circles and Tata Teleservices' three circles.
It was made compulsory for the these telcos to bag spectrum in the auction in order to continue their operations in their circles. The companies, however, stayed away from the auction citing high reserve price for the spectrum. The validity of the licences held by these companies is expiring on January 18, though some media reports say they may be in operation for few more days.
It's notable Tata has already announced its CDMA operations in Jammu and Kashmir, North East and Assam. SSTL, in the meanwhile, is seeking reinstatement of its licences and has filed curative petition before the Supreme Court.
Source: Economic Times