Home » Business » Govt mulls higher reserve price for 3G auctions
The upper limit was recommended by the department of economic affairs and the lower limit by the Department of Telecommunications. DoT had earlier recommended a reserve price of Rs 2,020 crore.
Spectrum auctions for 3G services were originally scheduled for February but were postponed owing to uncertainties over pricing and spectrum availability.
The government is also looking at auctioning five licences per circle depending on spectrum availability (state-owned BSNL and MTNL already have one each, the latter in Mumbai and Delhi), taking the number of operators per circle to six.
DoT had suggested auctioning licences for four operators per circle, excluding those given to state-owned corporations (either BSNL or MTNL, depending on the circle) making the total number to five per circle. However the Solicitor General of India suggested that the government should sell all available spectrum in one go, a view that appears to have found few takers.
Latest DoT estimates suggest that once the defence ministry releases spectrum as promised, most circles will be able to accommodate six to 12 operators.
A meeting between the finance ministry, DoT and the Prime Ministers Office is expected soon to discuss these issues.
Government sources explain that a higher base price for a licence will assure it of raising it a little over Rs 24,000 crore -- the minimum it expects to get from the 3G auctions -- if six operators are allowed. By accepting a lower base price, especially when the economy is still not out of the woods, sources said there might be a risk of not meeting the budgeted target for revenues from 3G auctioning.
The consensus formula is based on a DoT suggestion that the government could retain the reserve price suggested by them for C category circles, but make it 1.5 times for Kolkata and B category circles and double it for Mumbai, Delhi and A category circles from its earlier suggestion.
Experts, however, predict that the government will get more than the minimum estimate from 3G spectrum auctions. They said the upper price is reasonable given that data revenues, which 3G services support, offer much higher margins.
"Voice revenues have become a commodity business and there is very little margin. 3G will offer scope for date revenue with high margins which will push up revenues per user," said telecom analyst Mahesh Uppal.