Government approves 50 percent cut in CDMA spectrum auction price

The Cabinet has approved 50 percent reduction in CDMA spectrum (reserve) price which was fixed earlier at Rs. 18,200 crore (pan India 5MHz)," Telecom Minister Kapil Sibal said.

All the spectrum auction, GSM and CDMA, will be completed by March 31 and markets will decide how much revenue the government will get, he added.

After 50 percent reduction, pan-India 5MHz of 800 MHz spectrum (CDMA radio-waves) will now cost Rs. 9,100 crore.

The Cabinet, headed by Prime Minister Manmohan Singh, considered the recommendation of the Empowered Group of Ministers (EGoM) which suggested a 50 percent cut in the reserve price of 800 MHz band.

The November auction of CDMA spectrum did not attract bidders due to high reserve price. The reserve price set was 11 times higher than what operators paid in 2008.

The government had earlier fixed CDMA spectrum price at 1.3 times more than the GSM spectrum in 1800 Mhz band.

The Cabinet has already approved a 30 percent cut in the reserve price of 1,800 MHz band spectrum used for offering GSM services.

Reduction in reserve price of CDMA spectrum may help companies like Sistema of Russia to bid in the auction and make up for the ones they lost when the Supreme Court cancelled 122 licences in February last year.

The apex court has recently allowed the companies whose licences were cancelled to continue operations till February 4 when the government is supposed to inform it of the final reserve or minimum price for the spectrum sale.