Indian ministers have urged a 50% cut in reserve pricing for CDMA airwaves due to be auctioned in March, reports Reuters.
A panel of ministers told India’s cabinet, which has the ultimate say on spectrum pricing, that fees should be lowered by 30–50%.
A frequency auction in November raised less than a quarter of the INR400 billion the government was targeting, with CDMA airwaves going unsold.
Due to begin on March 11, the next auction is set to include GSM airwaves worth up to INR200 billion, plus a number of CDMA concessions.
In the November auction, the reserve pricing for CDMA frequencies was INR36.4 billion per MHz for all 22 regions – about 30% more than base pricing for GSM spectrum.
Having previously operated CDMA networks in India, Russia’s Sistema (Moscow, Russia) had been expected to bid for CDMA spectrum in the November auction, but it declined to participate on the grounds that frequency costs were too high.
Sistema has been ordered to shut down its Indian operations by January 18, along with other companies that had licences revoked in early 2012.
A number of operators that won 2G spectrum in 2008 were stripped of their concessions after India’s Supreme Court found there had been widespread corruption in the allocation process.
Because the Russian state holds a 17% stake in Sistema Shyam TeleServices, Sistema’s Indian venture, the licence cancellation has reportedly damaged relations between Russia and India.
The spectrum that was seized went back under the hammer in November, but the auction proceeds were hugely disappointing from the perspective of the government, which remains under pressure to plug a fiscal deficit.
Following news of the ministers’ recommendations, shares rose in Reliance Communications (Mumbai, India), India’s third-biggest operator, which operates both GSM and CDMA systems.
Although Reliance has not confirmed whether or not it will bid for CDMA frequencies, it looks set to benefit from lower surcharges for existing spectrum, according to Reuters.