A ministerial panel on Friday threw its weight behind watered down plans to cut the starting price at which mobile phone spectrum will be auctioned to operators in January, a cut demanded by companies battling low margins and high debt.
The panel is the last of four bodies to examine by how much the government should lower the reserve price for auctions after most carriers stayed away from bidding in the last two auctions criticising the prices as too high.
The prices recommended on Friday amounted to a final decision by the government, Telecommunications Minister Kapil Sibal told reporters after the meeting.
Friday's panel, headed by Finance Minister P. Chidambaram, backed a previous recommendation made by a group of civil servants to cut the reserve price by a quarter compared with the previous round of bids, Sibal said.
However, the new price is still 18 per cent higher than the one given in a separate recommendation by the sector regulator TRAI in September.
The panel endorsed an all-India reserve price of 17.65 billion rupees per megahertz of spectrum in the 1,800 megahertz frequency band used for basic mobile phone services.
For the premium 900 megahertz band, which will be sold only in three key zones including Delhi and Mumbai in January's auction, the reserve price was recommended to be set at 8.13 billion rupees in total. That is 25 per cent higher than the regulator's suggested price, but 53 per cent lower than the previous auction.
The 900 band is crucial for two leading Indian carriers --Bharti Airtel Ltd and Vodafone Group Plc's local unit -- as they must bid for spectrum in Delhi and Mumbai zones to renew their licences beyond November 2014.