Ministers panel on telecom proposes to lower spectrum price

The Empowered Group of Ministers (EGoM), chaired by home minister P Chidambaram, has proposed to lower the reserve price for the spectrum to be auctioned to betweem Rs14,000 crore and Rs16,000 crore. The Telecom Regulatory Authority of India (TRAI) had earlier recommended the reserve price of Rs 18,000 crore for the 2G airwaves.

The decision came after a meeting in Delhi on Friday. However, the EGoM did not finalise the one-time spectrum fee, which is likely to be taken up in its meeting next week.

The EGoM also approved deferred mode of payment for auction winners, under which operators would have to pay 25-30 per cent of spectrum fee upfront and the rest in installments over eight years. The deferred mode of payment was suggested by the Department of Telecommunications (DoT).

In addition, the telecom companies will have to pay spectrum usage charge of 3-6 per cent of their annual revenues.

''EGoM discussed three specific issues - the reserve price, spectrum usage charges and terms of payment The EGoM is going to make specific recommendations on each of these issues to the Cabinet so that the Cabinet decides on it,'' communications minister Kapil Sibal said after the meeting.

The GSM operators will have to pay 35 per cent of their bid amount up front, while CDMA players need to pay about 25 per cent. The operators will get a two-year moratorium on the balance payment after which it can be staggered over a 10-year period.

The EGoM will first present all the options related to the upcoming auction to the Cabinet for a final decision in order to meet the Supreme Court set deadline. The apex court has asked the Government to complete the auction by 31 August.