Govt speeding up 2G auction process; auctioneer likely next week

The government may be speeding up the processes to conduct the 2G auction even as overseas investors are signalling waning of their interest in Indian telecom story.

A report on CNBC-TV18 quoted telecom department sources to say the government is likely to appoint an auctioneer next week as part of its efforts to meet the Supreme Court directed deadline of 31 August for the auction.

The report said a resolution to the contentious issue of one-time reserve price is not essential to conduct auction and that a timeline for the auction will be clear in the next few days.

The sources said a Cabinet meet on Friday will consider auction price and rules.

[caption id="attachment_400092" align="alignleft" width="380"] Trai had recommended a minimum reserve price of over Rs 3,622 crore for auction of 1Mhz of spectrum in the 1800Mhz band. Reuters[/caption]

PTI had earlier reported that a high powered ministerial panel headed by Home Minister P Chidambaram had decided the Cabinet will take a final call on issues such as reserve price, spectrum usage charge and terms of payment.

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The panel had met on Friday and will make a specific recommendation on each of the issues to the Cabinet, it said quoting Telecom Minister Kapil Sibal.

Sectoral regulator Trai had recommended a minimum reserve price of over Rs 3,622 crore for auction of 1Mhz of spectrum in the 1800Mhz band, amounting to over Rs 18,000 crore for a pan-India operations in case of a new entrant.

The charge was applicable for spectrum held by existing operators.

The high price has become the bone of contention as the industry criticised it saying it would lead to tariff increase by up to 100 percent in certain circles.

The government has not been able to take a final decision yet and there were reports that it may miss the supreme court ordered deadline due to this.

In the earlier meeting, the ministerial had asked the department of telecom to prepare a matrix of reserve price in the range of Rs 12,000 crore to Rs 18,000 crore.

The DoT should calculate its impact analysis in the sector on the basis of spectrum usage charge in the range of 3 percent to 8 percent, it said.

The auction is important for companies such as Sistema Shyam Teleservices, Uninor and Videocon whose licences were cancelled by the Supreme Court as they have expressed interest in continuing businesses by participating in the auction.

Meanwhile, an HSBC note said foreign investors had a risk-off attitude and their interest in Indian telecom was waning. "Investor interest was muted on Indian telecom given the regulatory concerns and market structure issues," the note said.

It said in their interactions with investors, their questions were more focussed on two key issues namely: spectrum auctions and market structure.

HSBC is of the view that auctions at the earliest could be by November this year and the latest by January next year. On reserve prices, it does not expect significant downward adjustments to the reserve price and expect the changes to be around 20 percent.