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EGoM reduces 2G auction base price by 30%

10 Dec 2012 Evaluate

Perturbed by the weak response of the much-hyped recently concluded 2G auctions, the Empowered Group of Ministers has decided to reduce the reserve price for spectrum by 30 per cent for spectrum in Delhi, Mumbai, Rajasthan and Karnataka, the four circles which did not receive any bids in the recently concluded auction. Now the inter-ministerial panel would seek the Cabinet’s approval on the reduced base price for unsold airwaves in Delhi, Mumbai, Karnataka and Rajasthan.

The whole auctions turned out to be a damp squib, with the government getting less than a fourth of its revenue target of 40,000 crore and much lower than the expected target of minimum Rs 28,000 crore, as there were no takers for about 57% of the airwaves put on sale and it failed to attract even a single bid for 2G airwaves in the 1800 MHz band in these four regions.

The government had fixed a reserve price of Rs 14,000 crore per 5 MHz of spectrum. The reserve price for for Delhi was fixed price at Rs 693.06 crore for a slot of 1.25 Mhz in the 1800 Mhz band. The price for Mumbai, Karnataka and Rajasthan was fixed at Rs 678.45 crore, Rs 330.12 crore and Rs 67.08 crore respectively.

The EGoM has also decided to simultaneously auction spectrum in the 900 MHz band in Delhi, Mumbai and Kolkata. However, the reserve price for this spectrum band will be twice of the 1800 Mhz band, as it is considered to be more efficient and cost effective compared to the 1800 Mhz band. However, no decision on 800 MHz was taken; the minimum price for these airwaves had been set at 1.3 times that of GSM spectrum in the 1800 MHz band.

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