Indian government raises spectrum reserve prices

India’s Empowered Group of Ministers (EGoM) has ignored recommendations from the Telecom Regulatory Authority of India (TRAI) and approved a 25% increase in the reserve price of 900MHz spectrum.

The price per MHz for the 900MHz band will now be INR 3.60 billion in Delhi, INR 3.28 billion in Mumbai, and INR 1.25 billion in Kolkata. In addition, the government panel has set the reserve price for 1.8GHz spectrum at 15% higher than recommended by the TRAI. The nationwide base price will be INR17.65 billion per MHz.

Although they disregard TRAI’s advice, EGoM’s prices for both bands are in line with those suggested by the Telecom Commission – a Department of Telecommunications committee - earlier this month. In addition, the reserve prices are still substantially lower than the regulator’s previous auctions in November 2012 and March 2013, which failed to attract bids due to excessive starting prices.

The spectrum auctions are due to take place in January 2014. TRAI submitted its recommendations for reserve prices in September, and has now been requested to submit a further base price suggestion for 800MHz spectrum. TRAI’s suggestions were broadly seen as a response to accusations that the original reserve prices had been too high.

Meanwhile, the Telecom Commission’s recommendations were less well-received across the industry. A major argument against the higher prices was that India already charges its operators significantly more for spectrum than other markets. GSMA director-general Anne Bouverot called for the EGoM to select reserve prices that would encourage investment.

Telecom minister Kapil Sibal also confirmed that TRAI’s recommendations for spectrum usage charges would not be implemented. The regulator had suggested a flat fee of 3% of adjusted gross revenue. The current charges, which can be between 3% and 8% depending on the spectrum, will remain.

However, the EGoM did approve – in principle – the trading of spectrum between operators.

 

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