NEW DELHI (Reuters) - An Empowered Group of Ministers (EGoM) has
recommended a cut of up to 50 percent in the auction reserve price for
airwaves used by phone carriers operating on the CDMA platform, raising
the odds for the local unit of Russia's Sistema to continue operating in
the world's second-biggest mobile phone market.
The panel on Monday recommended to the cabinet that the
starting price for the airwaves be cut by 30-50 percent, two government
officials told reporters. The cabinet has the final say on airwave
prices.
India is betting on the revenue from phone airwave
auctions and stake sales in state-run companies to plug its widening
fiscal deficit. The government raised less than a quarter of its
400-billion-rupee target in a November auction.
The government is putting on the block GSM airwaves
worth 200 billion rupees in the next auction, which Telecommunications
Minister Kapil Sibal said is due to start from March 11. The CDMA
airwaves auction will also happen in March after bidding for GSM, he
said.
Sibal declined to comment on any recommendation for a cut in CDMA airwave reserve price.
India auctioned airwaves in November after a court
revoked the permits of several cellular carriers and redistributed
airwaves through open bidding.
The auction did not see any takers for CDMA (Code
Division Multiple Access) airwaves, while only part of the airwaves for
more popular GSM services were sold with carriers criticising the
reserve price as too high.
The government had earlier set the reserve price of
CDMA airwaves at 36.4 billion rupees per megahertz for all of India's 22
telecommunication zones, or 30 percent higher than that of GSM
airwaves. CDMA operators need a minimum of 2.5 megahertz of spectrum to
provide services.
The CDMA airwave auction is crucial for Sistema Shyam
TeleServices Ltd, which has been ordered to shut operations in all but
one of India's 22 zones because it did not participate in the last
auction.
The dispute over Sistema's permits has strained ties
between India and Russia, which has a 17 percent stake in the company's
Indian venture.
Reliance Communications, India's No.3 carrier that
operates on both GSM and CDMA technology platforms, rose as much as 3.5
percent after the news. The company has not said if it is looking to bid
for CDMA airwaves, but will benefit from a lower surcharge for existing
airwaves.
Tata Teleservices (Maharashtra) Ltd, the listed unit of India's sixth-biggest carrier Tata Teleservices, also rose 2.3 percent.
Companies, whose permits have been ordered to be
revoked by the Supreme Court have been asked to shut down operations by
January 18. But government officials have indicated that The
telecommunications ministry might seek more time for them from the
Supreme Court to attract bidders in the next auction.
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