India may cut 800-MHz reserve by 50%

Dylan Bushell-Embling
Daily News

India looks set to cut the reserve price for 800-MHz CDMA spectrum left unsold during the recent auctions by up to 50%, during a new auction scheduled for March 11.

The Empowered Group of Ministers tasked with formulating proposed terms of a re-auction has recommended a base price reduction of between 30% and 50%, an official with the telecom department told the Economic Times.

Ministers have left it to cabinet to make the final decision on whether to ratify the proposed terms of the newest attempt to re-auction spectrum vacated by the cancellation of 122 2G licenses last February in a court decision.

The department of telecom was forced to cancel the CDMA portion of the November auction, after the only two applicants, Tata Teleservices and Videocon, withdrew their applications.

The government also managed to sell only 42.4% of the 1,800-MHz spectrum that was put up for sale, with industry groups blaming sky-high reserve prices for the relative lack of bidding.

The DoT plans to put the unsold 1,800-MHz spectrum and some 900-MHz frequencies up for sale in March along with the 800-MHz spectrum.

Unsold spectrum in four regions – Delhi, Mumbai, Karnakata and Rajasthan - will be put up at a 30% lower base price. The initial auction generated no bids at all in these circles.

The fate of the 800-MHz spectrum is important to the survival of Sistema Shyam Teleservices, which had its CDMA operating licenses cancelled by the courts. According to the court decision, Sistema Shyam – controlled by Russia's Sistema - will have to shut down operations on January 18.

But Sistema has been seeking permission to challenge the decision in court, and the supreme court may hear the company's petition this week. The telecom ministry also recently indicated it is considering letting operators stay active past the January 18 deadline.

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