Telecom EGOM defers decision on reserved price

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SME Times News Bureau | 18 Jul, 2012
The Empowered Group of Ministers (EGoM) on telecom Wednesday deferred a decision on the crucial reserve price issue till Friday, raising doubts yet again about the government's ability to hold the 2G spectrum auction by Aug 31 as directed by the Supreme Court.

The EGOM at its meeting here, however, approved the roll-out obligations for the operators under which spectrum winners will have to cover 10 percent block headquarters in three years, 20 percent in four years and 30 percent in five years.

"There was discussion on two issues -- spectrum usage charges and reserve price, and the decisions have been deferred ... that decision will take place on Friday," Communications Minister Kapil Sibal told reporters after the meeting.

Last week, the EGoM had approved "in principle" the proposal to allow telecom firms to mortgage spectrum to raise funds from banks to buy airwaves.

The EGoM, which was reconstituted after Agriculture Minister Sharad Pawar opted out, is being headed by Home Minister P. Chidambaram and includes Sibal, Information and Broadcasting Minister Ambika Soni, Defence Minister A.K. Antony, Law Minister Salman Khurshid, and Minister of State in the Prime Minister's Office V. Narayanasamy as members.

At its earlier meeting, the ministerial panel had before it the sector regulator's presentation on impact of pricing on tariff. The Telecom Regulatory Authority of India (TRAI) has suggested that there should not be more than 10 paise per minute hike in the tariffs.

But telecom operators have been warning of a 100 percent hike in tariffs if the TRAI proposals are accepted.

According to sources, the EGoM has asked DoT to prepare a matrix of various levels of reserve price and spectrum usage charge and the impact that would have on the tariffs for consumers and the revenue accrued to the government.

TRAI had recommended a reserve price of Rs.3,622 crore for 1 Mhz pan-India spectrum, which is around 10 times higher than the price at which 2G licences were allocated in 2008 under then telecom minister A. Raja.

According to Consultants PricewaterhouseCoopers (PwC), telecom tariffs are expected to rise by 90 paise a minute in metros and 20-34 paise on an average across the country if the sector regulator's recommendations on spectrum pricing are accepted.