TRAI’s 2G pricing formula could net government Rs9000 cr

The government can collect over Rs90,000 crore by allotting an additional 1.8 Mhz of 2G spectrum to six new operators with pan-India licences, going by the Telecom Regulatory Authority of India's draft recommendation for 2G spectrum pricing.

Telecom Minister Kapil Sibal has fixed the contracted amount of start-up spectrum at 4.4 Mhz for new operators (who got licences in 2008) as against 6.2 Mhz for old operators like Bharti Airtel, Vodafone Essar and Idea.

Under the new policy, the new operators would have to pay market price for additional 1.8 Mhz of spectrum to come at par with the old operators (See: Spectrum to be allocated at market-linked prices: Sibal). 

According to a report in The Economic Times, sources in the know said that TRAI is contemplating a maximum price of Rs707.28 crore per Mhz of spectrum (1800 band) for the Uttar Pradesh (East) circle followed by Rs 617.09 crore per Mhz for the Rajasthan circle.

According to TRAI's draft recommendations, the pan-India value for 1.8 Mhz would cost a new operator over Rs15,082 crore to take the initial start-up spectrum to 6.2 Mhz level on par with old operators.

The telecom regulator is in the process of giving its recommendations on 2G spectrum prices. Earlier, it had proposed linking 2G spectrum prices with 3G. This was opposed by the incumbent operators, following which the TRAI had said that it would reconsider the matter.