NEW DELHI: The base price for the upcoming second generation bandwidth sale following the cancellation of 122 mobile licences by the Supreme Court last month can be anywhere between Rs 620.48 crore to Rs 4,571.85 crore for a single MHz or unit of spectrum, the country's telecoms regulator has said.
A company like Uninor, majority owned by Norway's Telenor, will be forced to pay between Rs 3847 to Rs 28,345 crore, depending on the final methodology adopted by Trai, as the reserve price to get 6.2 MHz or units of second generation airwaves. The final price will be higher and be determined through auctions. Mobile phone companies whose licences had been cancelled by the apex court had paid Rs 1658 crore for 6.2 MHz of airwaves on a pan-India basis in 2008.
Industry experts agree that 6.2 units of second-generation bandwidth is the minimum requirement to offer pan-India mobile services during the first five years of operations.
The apex court had directed the government to auction the airwaves and licences within four months after seeking recommendations from Trai.
The regulator has shortlisted seven models to fix the base price and has sought the industry's reaction to each of these methodologies before it finalises the reserve bid amount for the airwaves sale.
This will be a blow to several companies, including Uninor, Etisalat DB and S Tel amongst others, who had demanded that the base price for the auctions be fixed at Rs 1658 crore for 6.2 MHz of airwaves for 20-year period on a pan-India basis.
Many of these companies had demanded that the reserve price be such that 'it enables a successful bidder to have an economically viable and bankable business plan within a reasonable period of time'. They had also contended that even at a level of Rs 1,658 crore entry fee paid by new operators, these telcos had not been able to breakeven and further added that the experience of 3G auctions at Rs 16,750 crore for a pan India (5 MHz) spectrum had also not been encouraging so far.
But Trai in its consultation process has clarified that it had already recommended 'in May 2010 that the price of Rs. 1658 crore was no longer relevant'.
The base price will be the lowest if Trai were to take the price discovered in 2001 - Rs 1658 crore - and index this for or both inflation and cost of money against a prime lending rate of say 12%. This works to Rs 620.48 crore per MHz or Rs 3847 crore for 6.2 MHz of airwaves on a pan-India basis.
For the industry, the next best methodology will be to index the base price to the broadband wireless auctions in 2010, when 20 units of pan-India airwaves fetched Rs 12,848 crore.
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