India set for biggest ever spectrum sale

Eyeing a record high spectrum sale of Rs 1 lakh crore, the government on Wednesday fixed the base price for 3G auction at Rs 3,705 crore (Rs 37.05 billion) per mega hertz – which itself can fetch over Rs 17,000 crore (Rs 170 billion) from this band.

Along with the spectrum in 2,100 MHz band, which is used to offer 3G services, the government will also offer the second generation or 2G mobile airwaves in three different bands in an auction scheduled for March 4.

While the auction of these 2G and 3G airwaves could garner Rs 82,395 crore (Rs 823.95 billion) at the base or minimum price, sources said the government expects the total proceeds to exceed Rs 1 lakh crore.

The Union Cabinet, headed by Prime Minister Narendra Modi, on Wednesday approved the minimum or auction start price for airwaves in 2,100 Mega-Hertz band or 3G spectrum, which will garner at least Rs 17,555 crore (Rs 175.55 billion), Telecom Minister Ravi Shankar Prasad said.

Previously, it had approved reserve price for auction of 2G spectrum in 800 MHz, 900 Mhz and 1800 MHz bands that at the minimum rate set would get the government Rs 64,840 crore (Rs 648.40 billion).

Of these, the government will get Rs 16,000 crore (Rs 160 billion) from 2G spectrum sale and Rs 5,793 crore (Rs 57.93 billion) on 3G airwaves this fiscal and the remainder will flow in later.

"This time the reserve price is Rs 3,705 crore (Rs 37.05 billion) per MHz for 2100 Mhz. We have taken into account the market potential of this band," he said.

The Cabinet had approved a base price of Rs 3,646 crore pan-India per MHz in 800 MHz, Rs 3,980 crore (Rs 39.80 billion) for 900 MHz band pan India excluding Delhi, Mumbai, Kolkata and J&K and Rs 2,191 crore pan India (excluding Maharashtra and West Bengal) in 1800 MHz band.

According to sources, the combined proceeds from auction of all the four bands are estimated by the government at over Rs 1,00,000 crore -- making it the biggest ever spectrum sale.

Prasad said in 2010 auction of 3G airwaves, Rs 700 crore (Rs 7 billion) per MHz was determined as the reserve price and in the auction, the government earned Rs 3,350 crore (rs 33.50 billion) per MHz, which was almost 8-times the price.