The Cabinet Committee on Economic Affairs on Wednesday approved a base price of Rs3,705 crore per megahertz (MHz) for 3G spectrum auction, a move which would help the Government garner over Rs1 lakh crore along with sale of other mobile frequencies. "Cabinet has approved a reserve price of Rs3,705 crore per MHz for 2100 MHz band (which is used for 3G mobile services)," Telecom Minister, Ravi Shankar Prasad said after the cabinet meeting.
The estimated revenues from the auction of 2100 MHz Band are Rs17,555 crore of which Rs5,793 crore is expected to be realized in the current financial year. The reserve prices for other bands -- 800 MHz, 900 Mhz and 1,800 MHz -- have already been approved by the Cabinet for the auction, which is scheduled to start from March 4 along with the 3G spectrum band.
The 5 MHz Block will be offered in all service areas except Jammu & Kashmir, Bihar, Himachal Pradesh, West Bengal and Punjab. Thus a total of 85 MHz in 17 licensed Service Areas (lSAs) is being put to auction. The Defence Ministry has agreed to release 5 Mhz in 2100 Mhz band in 17 circles. The inter-ministerial panel Telecom Commission had suggested a base price of Rs3,705 crore per MHz as 3G spectrum base price for the auction scheduled for March 4.
The base price suggested by the Commission is around 11 per cent higher than what telecom firms paid for in the 2010 auction. It is also 36 per cent higher than sectoral regulator TRAI's recommendation of Rs2,720 crore per Mhz. The Cabinet in its meeting on January 5 had approved that 5 MHz in 2100 MHz band would be put up for sale in the upcoming auction but the pricing was not decided at that time. The Cabinet has asked ministries involved in the process to complete harmonisation within a year.
Investor confidence was shaken in the past because of very fluctuating tax policy wherein views of investors and Government were at loggerheads, Prasad said. The Cabinet has taken a conscious decision not to file an appeal in the Supreme Court, he said, adding "it was a legacy issue in telecom and finance". "We are trying to correct the legacy issue," he said. By this decision, he said, "a kind of signal we have given namely where the I-T liability is clear and unambiguous, it shall be charged.