Regulator Recommends Price Cut for India’s Wireless Airwaves

India’s telecommunications regulator yesterday recommended lowering reserve prices for the nation’s airwaves to attract buyers who stayed away in March.

The floor price for Delhi, Mumbai and Kolkata in the 900 MHz band should be cut by about 60 percent, Telecom Regulatory Authority of India Chairman Rahul Khullar told reporters in New Delhi. The combined price for the telecom circles in the 1800 MHz band should be cut to 14.96 billion rupees ($233 million), the regulator said on its website.

The reductions follow the failure of a March auction that drew just one bidder. Finance Minister Palaniappan Chidambaram is seeking to raise 408 billion rupees from the sale of telecommunications spectrum to curb the budget deficit to 4.8 percent of gross domestic product in the year started April 1 from 5.2 percent a year earlier.

“We’ve reduced the reserve prices to make the auction successful,” Khullar said. “If you ask me if the previous prices were high, my short answer is yes.”

The eligibility rules will remain the same as in the previous auctions, and no preference should be given to incumbents, the regulator has recommended. Bharti Airtel Ltd. (BHARTI) and Vodafone Group Plc (VOD), the nation’s largest phone companies, didn’t bid in the last auction.

‘Exorbitantly High’

Bharti climbed 5.6 percent to 331.30 rupees as of 10:29 a.m. in Mumbai trading, headed for the highest close since Aug. 16. The stock was the third-best performer on the 30-company S&P BSE Sensex index, which climbed 2.6 percent.

Ashutosh Sharma, a spokesman for New Delhi-based Bharti, said company officials weren’t ready to comment. Vodafone India declined to comment.

Arvind Bali, chief executive officer at Videocon Telecommunications Ltd., which had mobile-phone licenses canceled in February 2012 when India’s Supreme Court quashed 122 permits tied to graft, said the regulator’s recommendation will provide relief to the industry.

“The recommendation recognizes and reconfirms the fact that the reserve price fixed for the November 2012 auction was wrong and those who bid for spectrum have paid prices which are exorbitantly high,” Bali said in an e-mailed statement. “The recommendations are favorable to existing players who acquired licenses prior to 2008, and is penalizing new players.”

To contact the reporter on this story: Kartikay Mehrotra in New Delhi at kmehrotra2@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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