Pricing 3G spectrum at ₹3,705 cr/MHz, Centre eyes ₹1-lakh crore mop-up

The Cabinet on Wednesday approved a base price of ₹3,705 crore per MHz for the 3G spectrum auction. With this, the Centre has paved the way for simultaneous auctions of 3G and 2G spectrum in March.

“We have decided on a reserve price of ₹3,705 crore per MHz for the 2,100 MHz (3G) band. We have taken the market potential of this band and have decided on this reserve price,” Ravi Shankar Prasad, Minister of Telecom, told reporters here after the Cabinet meeting.

BusinessLine had said on Tuesday that the Cabinet would decide on the reserve price of ₹3,705 per MHz, as recommended by the Telecom Commission on January 19.

The Centre expects to garner around ₹1 lakh crore from the auctioning of these radio waves. Of this, ₹5,793 crore is expected in the current financial year.

The auctions will start from March 4. The Government expects to get ₹17,555 crore from the 3G auction alone.

The Telecom Minister said that in the last auction, which took place in 2010 for 2,100 MHz, the then Government had determined a reserve price of ₹700 crore per MHz and earned ₹3,350 crore per MHz after the bidding, almost eight times more than the reserve price.

The reserve prices for other bands — 900 MHz (₹3,980 crore per MHz), 1,800 MHz (₹2,191 crore per MHz) and 800 MHz (₹3,646 crore per MHz) — have already been approved by the Cabinet.

The 5MHz in the 2,100 MHz (3G) band being put up for sale was under the Defence Ministry, which recently agreed to release the capacity in 17 circles. Consequently, the price had to be determined later.

Spectrum swap

The Defence Ministry has another 15 MHz in the same band (2100 MHz), which the Government has decided will be swapped by the defence and telecom ministries.

The Cabinet has asked the ministries to complete the swap within a year.