India Panel Recommends Airwaves’ Price to Be Cut, Official Says

A panel in India’s telecom ministry has recommended the minimum price for an auction of wireless airwaves be cut to almost a third, a government official said.

The panel has suggested the reserve price for 900 megahertz spectrum in the country’s capital New Delhi be set at 3.6 billion rupees ($58 million), said the official asking not to be identified citing rules. At the last auction held in March the base price for the city was 9.7 billion rupees, according to the Department of Telecommunications website.

The recommendations follow auctions that raised money that fell short of government targets as Finance Minister Palaniappan Chidambaram aims to narrow the budget deficit to 4.8 percent of gross domestic product in the year started April 1 from 4.9 percent a year earlier. Bharti Airtel Ltd. (BHARTI), India’s largest mobile-phone carrier, and Vodafone Group Plc (VOD) were among wireless companies that did not bid at the March auction.

The next auction is likely to be held in January, Telecommunications Secretary M.F. Farooqui told reporters in New Delhi today. The panel consists of government officials and is headed by Farooqui.

“The pricing should be welcomed by the industry in January when they open up the bidding,” said Harit Shah, a Mumbai-based analyst with Nirmal Bang Equities Pvt. “There’s some pent-up demand for spectrum, which should help the government fill its coffers.”

The auction in March attracted just one bidder. In September, the nation’s telecommunications regulator recommended lowering reserve prices by about 60 percent.

Both Bharti and Vodafone will need to renew licenses to use airwaves in some regions by the end of next year to continue providing services in those areas.

The recommendations will now be reviewed by a group of empowered ministers, said the official.

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

To contact the editor responsible for this story: Daniel Ten Kate at dtenkate@bloomberg.net

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