John Giusti, chief regulatory officer of GSMA, has urged the Indian telecom commission to slash the reserve price of 700MHz spectrum to increase mobile broadband penetration.

“The GSMA is concerned that, if the Telecom Commission maintains the current reserve prices for 700MHz spectrum in India, there is the risk of a failed auction or, at a minimum, serious limitations on investment capability in next generation networks,” John Giusti said.

The total recommended reserve prices of $80 billion for the bands in the auction are almost double the cost of all spectrum investment to date in India. This equates to more than 20 times the annual free cash flow of the entire mobile industry in India.

GSMA said the India government’s decision to reduce Spectrum Usage Charges from five to three percent is a step in the right direction.

If the Government does reduce the spectrum reserve prices, the Indian Government may face the risk of unsold spectrum, as happened in Australia and recently in Senegal.

Telenor wants affordable spectrum or else exit

Telenor CEO Sigve Brekke on Wednesday warned that the telecom operator could exit from India if the spectrum prices are not reasonable.

Telenor has cut the valuation of its India operations by nearly $375 million and said its operations in the country are under pressure.

“With the current portfolio of spectrum we have not been able to compete in the growing data market,” said Sigve Brekke.

In the Delhi circle, TRAI has recommended Rs 1,595 crore for 700 MHz band, Rs 848 crore for 800 MHz, Rs 673 crore for 900 MHz, Rs 399 crore for 1,800 MHz, Rs 554 crore for 2,100 MHz, and Rs 143 crore for 2,300 MHz and 2,500 MHz.