Indian government provides details about auctioning 5MHz of 3G spectrum

The Indian government has announced its decision regarding the 3G auction price of spectrum in the 2100MHz band for the 5MHz block, pegging it at Rs 3705 crores per MHz. This is 11 percent more than the cost fixed for the 2010 sale of the same air waves. Back then, telecom companies had to shell out Rs 3335 crores for each MHz.

As for the auction itself, the schedule has been changed from February and postponed to March 4 of this year. The Telecom Regulatory of India (TRAI) had actually suggested a base price that was 36 percent lower than the current cost at which the 3G spectrum will be selling at, says a post on The Hindu.

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The Cabinet has however, chosen to go with the rate recommended by the Telecom Commission, which is Rs 3705 crores for 1MHz, of course. While making the announcement, Communications and IT Minister Ravi Shankar Prasad, noted that contrary to the widely believed notion of a spectrum deficit in India, there is an adequate amount of it.

At least, the Cabinet feels it is adequate. Prasad also went deeper into the matter, promising the release of additional air waves when needed, without particularly mentioning only 3G. The spectrum auction is presently expected to line the government’s coffers with roughly Rs 80000 crores in revenue at the new reserve price being quoted.

Also see: India’s largest spectrum auction will make govt richer by Rs 65000 crores

The 2100MHz band would have been nailed at just Rs 2720 crores per MHz, if the TRAI’s suggestion had been followed. The higher price of Rs 3705 crores for 1MHz is making network operators as well as the stock markets pretty nervous. Service providers are already complaining about the difficulty they’re having balancing their books due to losses in SMS and voice revenues.