The Empowered Group of Ministers (EGoM) comprising Mr. Kapil Sibal has reverted to TRAI for fresh recommendations on the spectrum reserve price for the third round of auctions. The Honorable Supreme Court of India had ordered the Auction of all 1800MHz Spectrum cancelled in the 2G Spectrum Scam, but Sibal’s Ministry did that selectively and it failed in some circles too.
TRAI is expected to do so within 60 days. We believe, like last time, TRAI would ask for recommendations from all stakeholders for the reserve price and the modalities of the auction. Also, the reserve price for the 1800 MHz band has been discovered in the first auction in November for all circles except Delhi, Mumbai, Karnataka and Rajasthan. In circles where the auction price has been discovered, if the reserve price is lowered, operators (Idea, Airtel, Vodafone, Telewings and Videocon) who won the spectrum at the auction discovered price could get a refund from the government.
Though most aspects of the auction remain unclear, there is a strong possibility that the reserve price may be significantly lowered considering the dull response in the first two rounds of auctions. Also, TRAI has taken an industry friendly stance recently by going against its own previous recommendation of abolition of roaming charges. It provides a strong case for a reduction in reserve price.
A drop in reserve price augurs well for incumbents as it translates into a drop in one-time spectrum fees (currently sub-judice), spectrum renewal charges and spectrum refarming, which is currently an unresolved issue. It is just a matter of time that