The Empowered group of ministers (EGoM) on spectrum, headed by P Chidambaram, is likely to meet next week to decide on the critical issue of compulsory participation of existing telecom companies like Bharti and Vodafone in the upcoming auction of second-generation (2G) airwaves, sources told NDTV.
The government will auction the GSM (global system for mobile communications) spectrum in 900 MHz and 1800 MHz bands together for the Delhi, Mumbai and Kolkata circles, sometime in March next year.
NDTV had learnt earlier that the new auction rules will treat existing operators, which are seeing their licences coming up for renewal in 2014, will get to retain their spectrum only if they participate in the auction as new entrants. This means that a failure at this auction will force companies like Bharti Airtel and Vodafone to give up their spectrum once their license expires.
The companies will, however, have the freedom to choose between the 900MHz and the 1800 MHz band. Existing telecom companies like Bharti Airtel and Vodafone hold nearly 10 MHz of spectrum in metro cities like Delhi and Mumbai, most of it in the coveted 900 MHz band. The reserve price for spectrum in the 900 MHz band is double that for the 1800 MHz band.
However, Vodafone, last week, wrote a letter to the government opposing the auction rules, claiming compulsory participation is against the spirit of auction.
The ministerial group will also take up the critical issue of auction of Code division multiple access (CDMA) spectrum in the 800 MHz band, sources said. Auction in this band had to be cancelled after both bidders – Videocon and Tata Teleservices - pulled out.
The EGoM will now decide if it will refer the details of CDMA spectrum auction back to the Telecom Regulatory Authority of India (TRAI). The regulator had first recommended a high reserve price for CDMA spectrum.
The panel could also decide to auction the 800 MHZ band spectrum without reducing the reserve price after the 1800 and 900 MHz bands have been auctioned.
While referral to TRAI may delay the CDMA spectrum auctions by four months, auctioning the airwaves without reducing the reserve price could see no bidders.
The government is hoping that the second round of auction will be more successful, earning the exchequer Rs 20,000 crore. The government managed to garner bids worth just Rs 9,407 crore in the first set of auctions in November 2012 as against a minimum target of Rs 30,000 crore.