India Cuts 800-MHz Airwave Price by 50% to Lure Bids at Auction

India reduced the opening price for its auction of 800 megahertz spectrum by half to attract bids after the government got a weak response from wireless operators in a November auction.

The decision was made at a cabinet meeting today, Manish Tewari, minister for information and broadcasting, told reporters in New Delhi.

The band, which is currently used to operate services provided by Tata Teleservices Maharashtra Ltd., AFK Sistema and Reliance Communications Ltd., will be auctioned in March. The cut falls short of operators’ expectations, Ashok Sud, secretary general of the Association of Unified Telecom Service Providers of India, told Bloomberg TV India.

“Our members had been hoping for a 75 percent cut from the last reserve price, then there may have been some significant interest from these players,” Sud said. “But to say members will not at all be interested is too sweeping a statement.”

India is preparing to sell airwaves leftover from its two-day sale in November to meet Finance Minister Palaniappan Chidambaram’s target of raising 400 billion rupees ($7.3 billion) he needs to cut India’s budget deficit. The government this month approved a 30 percent reduction in the minimum prices for the 1800 MHz spectrum which operators did not buy in the nation’s biggest mobile regions, Kapil Sibal, minister of telecommunications, said Jan. 7.

Tata Teleservices surged as much as 6.1 percent after the announcement, and traded up 2.9 percent to 12.71 rupees as of 2:47 p.m. in Mumbai. Billionaire Anil Ambani’s Reliance Communications gained as much as 4.3 percent, and traded up 2.7 percent at 83.10 rupees.

Tata Teleservices, Sistema and Reliance Communications use the 800 MHz spectrum to offer services based on code division multiple access technology.

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