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Spectrum sale could fetch over Rs.650 bln for Govt.

900 MHz, 1800 MHz and 2100 MHz (3G) airwaves will be sold simultaneously

In a booster to the cash-strapped Modi government, the exchequer will mop up at least Rs 650 billion through auction of mobile spectrum in February, a figure that will be further boosted manifold by a go-ahead to sale of 5MHz of 3G airwaves which happens after a gap of nearly five years.

The Cabinet cleared the much-anticipated sale of spectrum that will see airwaves being sold in the GSM bands of 900 MHz, 1,800 MHz and 2,100 MHz (3G) and also in the CDMA frequency of 800 MHz.

The Cabinet approved prices for all the bands but for the 3G frequency where telecom regulator Trai has proposed a reserve price of Rs 27.2 billion per megahertz but the inter-ministerial telecom commission is yet to arrive at a final price. Once the commission firms up its recommendations on the matter, they will be moved to the Cabinet for a final approval.

Sources said the government will include 3G airwaves in the February auctions as it wants to boost the availability of spectrum to keep a check on any unnecessary escalation in bid prices which may adversely impact consumer tariffs. Analysts said the actual realization may be near to over Rs 1000 billion, or even more, as operators will bid higher than the reserve prices cleared today.

These are just the reserve prices, and the bids would be higher considering that some of the top operators like Bharti Airtel and Vodafone have to necessarily buy spectrum in some circle to ensure availability of operations," Jaideep Ghosh, telecom analyst at KPMG, told Times of India.

Telecom Minister Ravi Shankar Prasad's parleys with Defence Minister Manohar Parrikar have resulted in freeing up 5MHz of 3G spectrum and talks are on to get another 15MHz from the armed forces, though this may not be available in the upcoming auctions.

"The government has taken steps to ensure availability of spectrum in order to avoid hoarding and stimulate fair competition in the market. The idea is to ensure that prices paid by the consumers remain at fair levels," Prasad told TOI. The money realized through the sale will be scattered over a number of years and the government expects to net at least Rs 160 billion this fiscal, excluding the proceeds from 3G sale.

The pan-India per megahertz reserve price approved for the 800 MHz CDMA band is Rs 36.46 billion, for the 900 MHz band Rs 39.8 billion (excluding Delhi, Mumbai, Kolkata, and J&K) and for the 1800 MHz band Rs 21.91 billion (excluding Maharashtra and West Bengal).

The quantum of spectrum to be put to auction is 103.75 MHz in 800 MHz band, 177.8 MHz (in 17 circles) in the 900 MHz band and 99.2 MHz (in 15 circles) in the 1,800 MHz band.

"Thus a total of 380.75 MHz in 800, 900 & 1,800 frequencies is being put to auction. The 3G pricing will also be worked out soon," Prasad said. The collections through the sale will help the government which has seen struggling to control fiscal deficit at 4.1% of GDP.

From Times of India

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