Govt sets out auction plans; Bharti, Idea double call rates

23 Jan 2013

The government has issued guidelines for the upcoming spectrum auction, which aims to dispose of frequencies left unsold following the poor response to November’s auction. The Economic Times reports that the second round of sales is expected to bring in some INR450 billion (USD8.39 billion) for state coffers. Following complaints over the high reserve prices in November, the base costs for spectrum have been lowered by 50% for 800MHz CDMA spectrum and 30% for GSM spectrum; 900MHz GSM spectrum has been fixed at double the price of 1800MHz airwaves. Twelve blocks of 1.25MHz in the 1800MHz band are available in Delhi and Mumbai, with reserve prices of INR4.85 billion and INR4.75 billion per block respectively, whilst eight blocks in the same band are available in Karnataka and Rajasthan, starting at INR2.31 billion and INR469.6 million. Meanwhile, twelve blocks of 900MHz spectrum are up for sale in Delhi and Mumbai, and ten in Karnataka.

In related news, Bharti Airtel and Idea Cellular have revealed plans to double call rates to INR0.02 per minute in response to escalating costs. The price increase will be rolled out to all 22 operating areas in a phased manner, an unnamed source told the paper. Free and bonus minutes are also expected to take a hit, decreasing by around 25%, whilst call vouchers for pre-paid customers are due to see a price hike of INR5-INR15. The proposals have been submitted to the Telecoms Regulatory Authority of India (TRAI). Commenting on the decision, a statement from Bharti explained: ‘We have been reiterating that increase in prices is inevitable, which is reflected from the fact that despite rising costs, tariffs have been falling over the past twelve quarters.’