Telecom Panel rejects 3G spectrum price

In the last couple of days there has been a lot of development on the 3G spectrum auction price. The Telecom Commission which is the nation’s top telecom policy decision-making body, has set the auction price to Rs. 3,705 crore as the minimum price for the Megahertz of the 3G spectrum which is proposed to happen in February. The commission rejected the recommendations of the telecom regulator to keep a lower price as the government seeks to raise additional revenue to meet its budget deficit target.

The Telecom Panel’s base price was Rs. 2720 crore and this price is 36% more than what the TRAI has suggested last month and reiterated it last week.
This auction is critical for the Finance Minister Arun Jaitley who seeks to raise an estimated of Rs. 64,840 crore. With this he wants to meet the target of narrowing the fiscal deficit to a seven year low. This revenue estimate figure does not include the sale of 3G airwaves. There is additional revenue of Rs. 18,500 crore that the government expects to raise by selling the 3G spectrum.
The auction will include a total of 5MHz of 3G spectrums along with spectrum in the 800MHz, 900MHz and 1800MHz bands. The Telecom Commission has decided to begin the auction on 25th February.

If the whole spectrum is sold, the auction is expected to get the government more than Rs.80000 crore including the 5MHz of 3G spectrum. A total of 20MHz of 3G spectrum is to be vacated by the defence forces out of which only 5MHz will be freed next month. It is still unknown about when the remaining 15MHz will be vacated by the defence forces.

While most of the spectrums in these bands are already being used by Telecom companies, their renewal is due in November next year.

The auction price decision of the government was not welcomed by analysts.