Cabinet may discuss spectrum reserve price tomorrow

The Cabinet is likely to discuss tomorrow the reserve price and usage charges of spectrum that is to be auctioned as per the Supreme Court order.

"Cabinet will discuss the spectrum reserve price and usage charge in its meeting tomorrow," sources in Department of Telecom (DoT) told PTI.

The Empowered Group of Ministers (EGoM), headed by P Chidambaram (who has now taken over as the Finance Minister) has suggested a 20% lower base or reserve price at Rs 14,000-15,000 crore for 5 Mhz of airwaves as against around Rs 18,000 crore recommended by sectoral regulator Trai for the auction of spectrum vacated after the Supreme Court order.

EGoM has proposed to fix 1.3 times of this price as minimum price for companies that may bid for airwaves that are being used for providing CDMA services at present.

On the issue of spectrum usage charge, the high-powered panel has suggested a slab rate system in the range of 3-8%.

The EGoM has already taken decisions on mortgage of spectrum, terms of payment and roll out obligations. The Supreme Court had in February this year cancelled 122 licences issued by the then Telecom Minister A Raja in 2008 and asked the government to conduct fresh auctions.

The industry had been pitching for a 80% cut in the reserve price as they feel TRAI recommended rates would lead to up to 100% hike in mobile telephone charges.

The auction is crucial for companies like Uninor and Sistema Shyam Teleservices, who have time till September 7 to offer their services after which they will be forced to close down their operations in case they fail to get a licence.