PTI, February 10, Jasmine Ahmed: Government will get a minimum Rs 6,750 crore for spectrum…
A day after Trai suggested a whopping Rs 5.36 lakh crore spectrum auction plan, telecom operators body COAI on Thursday said it will approach the regulator to understand the methodology it used to conclude recommendations.
“Our first point of call is to express to Trai why I believe, there may be an error in term of methodology they have used and process that they have come to this conclusion. We want to take a look at that,” Cellular Operators Association of India (COAI) Director General Rajan S Mathews told PTI.
Though Telecom Regulatory Authority of India (Trai) has explained the mechanism it used for calculating spectrum base price, COAI wants to re-confirm with the regulator if it has taken into consideration market conditions and financial conditions of telecom operators.
The total potential revenue of Rs 5.36 lakh crore from the spectrum sale, expected to be held during May-June this year, is more than double of gross revenues of telecom services industry. Telecom service providers had gross revenue of Rs 2.54 lakh crore in 2014-15 financial year.
The regulator has recommended record base price of Rs 11,485 crore per Mhz for 700 Mhz which alone. If all available frequencies gets sold at Trai suggested price then it can alone contribute over Rs 4 lakh crore.
Trai has used its old formula given in April 2012 spectrum price recommendation to fix price of 700 Mhz at four times of 1800 Mhz band spectrum price– widely known as 2G spectrum.
Most of telecom operators who have purchased 1800 Mhz band in 2012 or later are using it for 4G services.
For 1800 Mhz spectrum band, the regulator has used producer surplus model, production function model, revenue surplus model. It has considered its price achieved in 2015 auction and if that it not available then indexed previous auction price to come at tentative price.
The Department of Telecom is now studying Trai’s recommendation and final call on it will be taken by cabinet after completion of various intermediate steps.