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Corporate Jan 2, 2013

EGoM to provide roadmap for CDMA tomorrow

By Sindhu Bhattacharya

New Delhi: A meeting of the Empowered Group of Ministers (EGoM) scheduled for tomorrow morning is expected to provide a roadmap for the way forward for CDMA technology.

Not a single Code Division Multiple Access technology player participated in the recently concluded auctions for airwaves, prompting Telecom Minister Kapil Sibal to indicate a reduction in the price of the 800 mhz spectrum band recently.

As per an earlier decision, 800 mhz airwaves were to be auctioned at a base price which was 1.3 times the base price of 1800 mhz band (Rs 14,000 crore for 5 mhz). But this price alienated all possible bidders.

Reuters

Now, according to a note the Department of Telecom (DoT) has prepared for the EGoM meeting, there are two options:

a) reference to sector regulator Trai for recommendations. But this could take anywhere between 4-6 months

b) hold auction for 800 mhz in succession to the forthcoming auctions of 1800 mhz and 900 mhz bands.

CDMA industry sources told Firstpost that Sibal could look at substantial reduction in the price of 800 mhz airwaves and there is a possibility that the price could be lower than the reserve price of the 1800 mhz band. But this could turn out to be wishful thinking, with many opponents who will point out the multiple of 1.3 vis-a-vis the price of 1800 mhz airwaves. Any decision will be known only after tomorrow's meeting.

As per draft guidelines for the auctions in 1,800 mhz and 900 mhz spectrum bands, reviewed by Firstpost earlier, the government has decided to consider all those telecom companies whose licences come up for renewal in 2014 as 'new entrants'. This move will affect incumbent GSM biggies Bharti Airtel, Vodafone and Idea Cellular the most since they will be forced to participate in the auctions or stand to lose their licences in some of the country's most lucrative telecom circles.

The auctions are scheduled to take place in March 2013. For the 1,800 mhz band they will be conducted in four circles of Delhi, Mumbai, Rajasthan and Karnataka where an earlier auction got no response. For the 900 mhz band, they will be conducted in Delhi, Mumbai and Kolkata.

The government has already reduced the reserve price in the four 1,800 mhz circles by 30% and since the 900 mhz price is twice that of 1800 mhz, its reserve price has also been proportionately reduced in Delhi and Mumbai.

According to the draft guidelines which are yet to be issued, the government wants to put up 15 mhz each in the 900 mhz band for auction in Delhi and Mumbai. This means, it has assumed that refarming would have been completed by then because otherwise Bharti Airtel and Vodafone hold 16 mhz spectrum in the 900 mhz band between themselves as of now.

Refarming has already been approved where telcos who possess 900 mhz airwaves will have to give these up and bid for the less efficient 1800 mhz at current prices. These telcos are allowed to retain 2.5 mhz spectrum in the 900 mhz band but that retention will also have to happen at auction-determined prices.

So the Government is trying to make two things clear:

1) it will not allow any telcos to bypass or ignore the auctions for either 1800 mhz or 900 mhz

2) it will put up much of the 900 mhz spectrum received in refarming in the top telecom circles like Mumbai and Delhi for auctions by March.

As per the draft guidelines, the reserve price per block in Delhi for 1800 mhz spectrum band would be Rs 485.15 crore; Mumbai Rs 474.92 crore; Karnataka Rs 231.08 crore and Rajasthan Rs 46.96 crore.

The reserve price for 900 mhz spectrum band in Delhi and Mumbai will then be twice the 1800 mhz price at Rs 970.3 crore and Rs 949.84 crore while for Kolkata it would be Rs 227.44 crore.

by Sindhu Bhattacharya

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