Pranab-led EGoM set to fix spectrum price today

Finance Minister Pranab Mukherjee would continue to chair the crucial Empowered Group of Ministers (EGoM) on telecom until he files his nomination papers for the presidential election.

The finance minister’s office had sought the Cabinet Secretary’s opinion whether Mukherjee should remain part of the EGoM in the wake of his presidential candidature. Among other issues, the EGoM is slated to decide on the base price for the 2G spectrum auction tomorrow. The base price of Rs 3,622 crore per MHz (Mega Hertz) recommended by sector regulator Trai was roundly criticised by telecom operators, after which the Telecom Commission sought a regulatory report on the base price’s impact on tariffs.

 

The Trai had said the impact would not be more than 4-6 paise a minute, but the operators said it would be as high as 26-90 paise a minute. The impact report would be put before the EGoM. The Trai, under new chairman Rahul Khullar, reiterated in a presentation to a Joint Parliamentary Committee (JPC) on Tuesday its earlier recommendation that the base price be based on the 3G auction price, adjusted for inflation.

KEY ISSUES BEFORE EGOM

• Reserve price for auction of spectrum
• Mortgage of spectrum by telecom operators
• Spectrum usage charges

Khullar added in the presentation to the JPC that in 2008, the promoters of two companies with 4.4-MHz spectrum each in the 1,800-MHz band had diluted their equity valued at Rs 10,000 crore. The current value of that would be Rs 15,735 crore, factoring a rise of 12 per cent per annum, he said. That would come to Rs 3,576 crore per MHz, in line with the recommended base price.

The DoT (department of telecommunications) has accepted the mortgaging of spectrum. But, it has rejected a Reserve Bank of India proposal that in case of a default by operators having mortgaged spectrum, the lender could sell it to recover the money. The policy to decide charges to be paid by operators for holding excess spectrum will likely be taken up by the Cabinet later this month.

Earlier, the finance minister’s office had asked Cabinet Secretary Ajit Kumar Seth on June 16 if it would be appropriate for Mukherjee to chair the EGoM. According to officials in the know, Seth made it clear Mukherjee could continue on EGoMs till he filed the nomination papers.