India announces 2G auction pricing

India announces 2G auction pricing

Mobile operators will have to pay a minimum of $2.5 billion for 5MHz of pan-India spectrum in the country’s long awaited 2G auction, the country’s Cabinet has decided.

The pricing is 7.4 times higher than the amount India’s operators paid in the highly criticised 2008 spectrum auction. A total of 13.75MHz of 1800 spectrum will be made available to bidders.

Although the amount is lower than that advised by regulator Trai it is still significantly higher than the 80% reduction demanded by India’s operators.

All 122 licences awarded in the previous auction, and owned by nine of the country’s operators, were cancelled in February by India’s Supreme Court, which questioned the legitimacy of the 2008 auction process.

Already several of India’s telecoms players have released statements saying that they will have to pass the higher costs of bidding for spectrum on to customers.

The Cabinet also approved recommendations to keep the reserve price for the 800MHz band at 1.3 times higher than the 1800MHz band.

In addition to bidding for spectrum, Indian mobile operators will also have to share 3-8% of their annual revenue as spectrum usage charges. This is higher than the 1% recommended by Trai and the 3% recommended by India’s telecoms ministry.

A panel of ministers will meet today to decide a revised timeline for the auction, as the government is expected to be unable to meet the Supreme Court’s deadline for reissuing the 2G licences of August 31.

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