TRAI Wants 15% Increase In CDMA Spectrum Reserve Price To Rs. 3104 Cr

The Telecom Regulatory Authority of Indian (TRAI) has recommended an increase in reserve price for 800 MHz (CDMA) spectrum by 15.6% percent.  If this TRAI recommendation is executed, the CDMA spectrum price will increase from Rs. 2685 crore per MHz (as suggested in February) to Rs. 3104 crore.

TRAI, in its release, has said that considering current data trends and other relevant factors, the valuation done in February is lesser than it should.  Here is the recommendation made by TRAI according to fresh valuation for various Pan-India telecom circles.

Interestingly, this reserve price is over 70 percent higher than the price set during 2013 spectrum auction. In the 2013 auction Sistema Shyam Teleservices was the only the operator who had purchased 800MHz spectrum for eight circles at a price of Rs. 3639 crore.

TRAI has done the fresh valuation of 800 MHz spectrum on various parameters, which include calculating the price 1.5 times or 2 times of value of 1800 Mhz band, producer surplus model, model based on revenue from data services and valuation in February auction determined price of 900 MHz.

The TRAI has also reiterated their earlier suggestion that PSU’s (BSNL and MTNL) who are barely using the 800 MHz spectrum should give back the spectrum. They recommended that DoT should take back from MTNL its entire spectrum holding. On the other hand, BSNL should be allowed to retain only one CDMA carrier and should take back other carriers assigned to them in 800 MHz band.

In the new Government’s budget, they had projected a minimum revenue of Rs. 9,355 crore from 800MHz, 900MHz and 1800 MHz band. If the previous auctions are anything to go by, that target should be surpassed quite easily!

Govt is expecting to make quite a moolah from the auction scheduled early next year. Renewal of Telecom licenses from 4 major operators are also coming up. 4 licenses of Bharti Airtel, 7 each of Idea Cellular and Reliance Communication and 6 of Vodafone will expire this year after they complete their 20-year term. These licenses will require renewal by December 2015. To continue offering mobile and wireless services, these companies will need to buy spectrum through auction at market determined rates!