Lower spectrum reserve price to reduce one-time payouts: Icra

A reduction in reserve price of spectrum, as proposed by telecom regulator Trai, will result in lower payouts for one-time charge on mobile operators for holding excess radiowaves, Icra said today.

"As per Icra estimates, the one-time spectrum charge would reduce by about 40 per cent for the industry and the renewal payouts would reduce by around 50 per cent," the research firm said in a release.

Besides, it estimates that the industry may gain Rs 800-900 crore annually on account of Spectrum Usage Charges.

Earlier this week, Telecom Regulatory Authority of India recommended a pan-India reserve price of Rs 1,496 crore per MHz in the 1800 band, down 37 per cent from the base price set in the previous auction.

In the 900 MHz band, it recommended a reserve price of Rs 288 crore per MHz for Delhi, Rs 262 crore for Mumbai and Rs 100 crore for Kolkata. These rates are about 60 per cent lower than the reserve price in the previous auction.

"In Icra's view, recommendations provide a major relief to the industry by reducing the spectrum reserve price and thus will have far-reaching consequences in terms of lowering the cost of spectrum renewal and the proposed one-time spectrum fee," it said.

However, such reduction puts those telcos at competitive disadvantage who had acquired spectrum at relatively high prices in November 2012 (such as Telewings, Videcon, Idea etc), it added.

With regard to the impending auction of 900 and 1800 MHz bands, Icra expects more enthusiastic participation in the 900 MHz spectrum.

Trai has recommended reduction in SUC, which would benefit the industry, especially incumbents, Icra said, adding that it estimates that such payouts for the industry would reduce by Rs 800-900 crore annually in the medium term.

Trai's proposal on spectrum trading should promote efficient utilisation and consolidation of spectrum and provide an exit route to the telcos. The recommendations also cover areas like roll-out obligations and expanding available GSM spectrum in the 900 MHz band, it said.