Floor price for spectrum auction fixed at Rs 14,000 crore

The Cabinet today fixed a minimumor base price of Rs 14,000 crore for the Supreme Courtmandated auction of telecom spectrum.

The Cabinet, headed by Prime Minister Manmohan Singh,decided to fix the reserve price at the lower end of the Rs14,000 crore to Rs 15,000 crore band that was recommended byan Empowered Group of Minister (EGoM), official sources said.

The EGoM had suggested a reserve price at Rs 14,000-15,000crore for 5 Mhz of airwaves as against around Rs 18,000 crorerecommended by sectoral regulator Trai for the auction ofspectrum vacated from cancellation of 122 licences by SupremeCourt.

Sources said the Cabinet approved levy of annual spectrumusage charge of 3 to 8 per cent on different slabs of revenueas was recommended by the EGoM headed by P Chidambaram.

Chidambaram has been made the Finance Minister in a minorCabinet reshuffle early this week.

The apex court had in February this year cancelled 122licences issued by the then Telecom Minister A Raja in 2008and asked the government to conduct fresh auctions by August31. But this deadline may not be met and the government mayapproach the apex court for extension of the timeline.

The reserve price fixed would be a disappointment for thetelecom industry which had been pitching for a 80 per cent cutin the reserve price suggested by TRAI which they felt wouldlead to up to 100 per cent hike in mobile telephone charges.

The auction is crucial for companies like Uninor andSistema Shyam Teleservices, who have time till September 7 tooffer their services after which they will be forced to closedown their operations in case they fail to get a licence.

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