TRAI Recommends Roadmap for Spectrum, Base Pricing Higher than Last Auction

TRAI has released recommendations/ suggestions for next round of spectrum auctions expected to be conducted in Q1CY15. Key highlight of the recommendation paper is that the authority expects government to make available additional 900MHz and 3G spectrum from government agencies, and have a roadmap for spectrum supply in 700 / 800/ 900 / 1800 / 2100MHz frequency bands, before conducting next round of auctions.

Guidelines for Auction of 1800/900MHz Spectrum

  • Spectrum should be auctioned in block size of 2x200KHz for both 900MHz and 1800MHz band – this is in line with operators suggestion.
  • Reserve prices for both 1800MHz and 900MHz have been re-calculated. It is ensured that the new reserve price for 1800MHz in any circle is not lower than the previous final price (discovered in Feb’14 auctions), and the reserve price of 900MHz in any circle does not exceed ~2x the suggested reserve price for 1800MHz in that circle.
  • Overall the new reserve price for 1800MHz across 20 circles is ~9% higher than the price discovered in Feb 2014 Auction. Prices in larger circles have been kept largely unchanged. Reserve price for 900MHz spectrum in 18 circles is at ~1.9x the price of 1800MHz discovered in Feb 2014.
  • 30% and 50% discount has been given to price of 1800MHz spectrum in Rajasthan and North East for lack of adequate spectrum in Rajasthan and to promote investment in North East

The following chart shows Side by Side Comparison of 2014 1800MHz Spectrum Auction Price and 2015 Spectrum Reserve Price1800Mhz Reserve Price

The following chart shows Side by Side Comparison of 2014 900MHz Spectrum Auction Price and 2015 Spectrum Reserve Price900Mhz Spectrum Reserve Price

We think that clarification on roadmap for supply of spectrum bands could delay the auction process, and lead to medium term uncertainty.

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