India to slash 2G spectrum price by 30% for unsold telecom circles?

Telecom Lead India: India may slash spectrum price by 30 percent for unsold telecom circles such as Delhi, Mumbai, Karnataka and Rajasthan.

Agency reports suggest that the government has taken a decision to reduce the prices of the spectrum to attract more bidders.

Telenor, Videocon, Reliance Industries, Airtel, Idea Cellular and Vodafone are expected to join the race for buying the spectrum.

In November, the government mobilized around Rs 9,400 crore from spectrum sales against a target of Rs 40,000 crore.

In the second round of auction, the government can mobilize around Rs 15,000-20,000 crore if the spectrum price attracts bidders. But there are several challenges.

Idea Cellular recently said that if there is any revision in the price of unsold spectrum in these 4 circles, the benefit should be passed on to buyers of other circles. If the government does not pass the benefit, it will further create opportunities for litigation.

Videocon Mobile Services on Wednesday said it will launch 4G services using the liberalized spectrum. This means that the government is selling the 2G (can we call its 4G/LTE) spectrum in 1800 Mhz at throw away prices. If the spectrum can be utilized for launching FDD LTE services, should the government sell the spectrum at a higher price?

Industry captains say the government’s focus is to fill in gaps in fiscal deficits. They are not concerned about the opportunities that can create in the Indian economy.

Swati Rangachari, vice president, Communications and Corporate Affairs, Ericsson, said told, recently: “It is proven that increase in telecom penetration directly contributes to the growth of GDP growth of the country.”

According to GSMA, doubling of mobile data use leads to an increase of 0.5 percentage points in the GDP per capita growth rate across 14 countries. 10 percent rise from 2G to 3G penetration increases GDP per capita growth by 0.15 percentage points. In developing markets, 10 percent expansion in mobile penetration increases productivity by 4.2 percentage points.

Ericsson, Alcatel-Lucent, Nokia Siemens Networks, Huawei, ZTE, Cisco and Samsung are going to benefit from the spectrum sale.

Telecom is already a cash cow. Telecom operators garnered revenues of over Rs 1.62 lakh crore in 2010-11, with private players accounting for more than 79 per cent of the share. Gross revenue of telecom service providers (including NLD/ILD and ISP stood at Rs 162,918 crore in 2010-11, of which Rs 129,289 crore was private operators’ share.

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