Cabinet to discuss telecom spectrum pricing issue today

New Delhi: The government is likely to discuss on Thursday recommendations made by the Empowered Group of Ministers (EGoM) on pricing of spectrum that was unsold in the recently concluded auction. The matter has been listed for discussion in the Cabinet meeting slated for Thursday evening, official sources said.

The EGoM on telecom matters, headed by Finance Minister P Chidambaram, is learnt to have recommended a 30 per cent cut in base price for 2G spectrum in four circles that remained unsold in last auction -- a suggestion that could fetch Rs 6,200 crore to exchequer.

The four circles -- Delhi, Mumbai, Karnataka and Rajasthan -- were some of the most expensive in last month's 2G spectrum sale. The circles saw no takers as operators found the base price too high. At the old rates, the government would have earned a minimum of Rs 8,843.55 crore if the 5 Mhz each in these four circles were sold out.

The Empowered Group of Ministers (EGoM) on December 7 also suggested auctioning spectrum in 900 MHz band in Delhi, Mumbai and Kolkata simultaneously with the sale of radiowaves in 1800 Mhz in these four circles. Telecom minister Kapil Sibal after the EGoM had said that the recommendations of EGoM will go to "Cabinet for the approval on the pricing".

As per the EGoM decision, the auction is to be completed within ongoing financial year. There were also no bidders for CDMA spectrum but EGoM did not decide on the auction of airwaves in 800 Mhz band. The last 2G mobile phone spectrum auction was virtually a flop as government managed to garner bids worth just Rs 9,407 crore as against a minimum target of Rs 28,000 crore.

According to sources, the EGoM also decided to recommend to Cabinet that reserve price for premium 900 Mhz band, being used currently by Bharti Airtel, Idea Cellular and Vodafone in Delhi and Mumbai service area, should be twice the reserve price for 1800 Mhz band.

For Kolkata, the EGoM recommended that price for 900 Mhz band should be twice the price obtained for 1800 Mhz band in the recent auction which was Rs 113.72 crore for each block of spectrum having 1.25 Mhz of airwaves frequencies.