30% reserve price cut wont create much interest: COAI

Rajan Mathews, directorate-general (DG), Cellular Operators Association of India (COAI) says any reduction in the reserve price is a welcome move. However, a 30 percent reduction, he says, is not something that is going to generate a whole lot of additional interest.
  • Language
  • App
  • Subscriptions
  • Specials
  • Sign-In
  • Register
GeStepAhead master your money Realasset
moneycontrol.com

Home » News » Business

Dec 07, 2012, 10.24 PM | Source: CNBC-TV18

30% reserve price cut won't create much interest: COAI

Rajan Mathews, directorate-general (DG), Cellular Operators Association of India (COAI) says any reduction in the reserve price is a welcome move. However, a 30 percent reduction, he says, is not something that is going to generate a whole lot of additional interest.

Like this story, share it with millions of investors on M3

30% reserve price cut wont create much interest: COAI

Rajan Mathews, directorate-general (DG), Cellular Operators Association of India (COAI) says any reduction in the reserve price is a welcome move. However, a 30 percent reduction, he says, is not something that is going to generate a whole lot of additional interest.

Post Your Comments

Share Cancel

Set a realistic reserve price and let the auction process and dynamics determine the final value that the market places on that spectrum.

- Rajan Mathews (DG)

After the failure of the 2G auctions, sources tell CNBC-TV18 the government has decided to lower the reserve price for 2G spectrum . Sources say the reserve price has been cut by 30 percent in four circles.

In an interview to CNBC-TV18, Rajan Mathews, directorate-general (DG), Cellular Operators Association of India (COAI) says any reduction in the reserve price is a welcome move.

However, a 30 percent reduction, he says, is not something that is going to generate a whole lot of additional interest.

Below is the edited transcript of his interview on CNBC-TV18.

Q: Telecom Minister Kapil Sibal is saying they have decided on a reserve price. According to source based information, in the four unsold circles, it is going to be 30 percent lower. Do you think that is enough to bring back players to get an interest back in these circles?

A: Any reduction in the reserve price is a welcome move. However, a 30 percent reduction, in my opinion, is not something that is going to generate a whole lot of additional interest. So, I really do not think, especially in the key circles of Delhi and Mumbai, that you are going to see seeing significant new interest generated by a mere 30 percent reduction.

Q: Obviously lower the better would have been good for you. But realistically speaking, at what level, do you think the government should have set the reserve price so that it would have been a competitive auction?

A: First of all, we need to rationalise what one means by a reserve price. This has been the conundrum all along. Set a realistic reserve price and let the auction process and dynamics determine the final value that the market places on that spectrum. So, we keep falling into this trap of setting a reserve price, which people believe ought to be near the realised price. So, in our expectations, you should start at about 20 percent of what this reserve price is being set at and let the market dynamics determine as to how high that will go.

Q: We understand from our sources that 900 MHz is still going to be two times the price of 1800 MHz. What is your reaction on that front?

A: It is absolutely way out of the ballpark. You are talking about Mumbai, for example 5 MHz of spectrum, at that price, would be asked to shell out Rs 3,800 crore. Trying to make a business case, at those levels, is totally unrealistic.

Secondly, as we have indicated there is a real legal issue in terms of this notion of taking back spectrum and refarming it. That matter will also have to be resolved. The ratio, which is being applied, the 1.5 or two times ratio amount, which is being put on, is in our expectation quite in question, especially given that 800 MHz had not been auctioned at all.

1 2

Ads by Google

Buy, Hold, Sell ? Hear it first on M3
30% reserve price cut wont create much interest: COAI

See all

Get started using your favorite social network

or

Login using moneycontrol ID

Username
Password

Need help logging in? Reset password.

Don´t have an account? Sign Up

Get started using your favorite social network

or

Simply sign up using this short form

* mandatory

UserName*

Username should be atleast 4 character

Password*

Password should be 8 or more characters,
atleast 1 number, 1 symbol & 1 upper case letter

Alert

Your Password should contain
  • 8 or more characters
  • At least 1 number
  • At least 1 symbol
  • At least 1 upper case letter
Confirm Password*
Email
Already have an account? Login