New Delhi: The newly constituted empowered group of ministers (eGoM) on second-generation, or 2G, telecom spectrum decided on Thursday to ask the Supreme Court for an extension in the deadline of the upcoming auction of frequencies.
It didn’t, however, decide on the crucial issue of reserve price for 2G spectrum to be sold in the auction, while allowing winning bidders to mortgage the resource.
“In case there is a default by the operator taking the loan, the bank would be allowed to auction the spectrum,” said a senior government official, who attended the meeting, on condition of anonymity.
Mint reported last week that the panel may approach the apex court and seek an extension on the 31 August deadline for completing the auction.
The eGoM has also been asked to approve a new timetable to complete the auction. According to an internal note, the department of telecommunications (DoT) expects to issue the information memorandum, which outlines all the rules and policies governing the auction for potential bidders, by 22 August. The note also adds that the auctioneer will be selected by 26 July.
However, according to the note, the revised schedule is based on the assumption that all the relevant decisions would have been taken by 11 July, thus increasing the prospect of further delays.
The eGoM’s next meeting is likely to be held on 16-17 July and is likely to decide on the spectrum reserve price and payment terms. It is unclear whether the eGoM will decide on the refarming issue or forward it to the cabinet.
As Mint reported last week, the issue of spectrum pricing for airwaves held by the incumbent operators will be decided by the cabinet committee on infrastructure, based on the recommendations of the eGoM. The cabinet decided to forward the issue to the eGoM in its meeting on 3 July and asked for specific recommendations. The 2 February Supreme Court order that cancelled 122 telecom licences and the spectrum allocated to the nine companies that held them, said the government had to conduct an auction of the airwaves by 2 June. This deadline was extended to 31 August after a request from DoT.
According to another official, Telecom Regulatory Authority of India (Trai) chairman Rahul Khullar also made a presentation to the ministerial panel saying that the impact of the spectrum at the reserve price it had recommended would affect tariffs by around 10 paise per minute. Mint could not independently verify this.
The decisions of the eGoM, especially on the reserve price, are keenly awaited by the industry but the panel has been unable to meet because of a number of reasons. The panel could not meet on 3 July as the newly appointed head, agriculture minister Sharad Pawar, asked to be recused from the meeting for fear of being dragged into the 2G controversy. Pawar was replacing former finance minister Pranab Mukherjee, who resigned as chairman of the eGoM in order to contest the presidential election. Mukherjee did not want to be a part of a controversial decision that could affect his presidential campaign.
“The decision to allow mortgage of spectrum will help telcos that are already over-burdened with debt because of the last auction. It will enhance liquidity, and also the borrowing capacity of the industry. However, as long as the fundamental issues are not addressed, their balance sheets will continue to be stretched. Servicing this debt will be more and more challenging,” said Hemant Joshi, partner, Deloitte Haskins and Sells.
The newly constituted eGoM is headed by home minister P. Chidambaram and also consists of defence minister A.K. Antony, information and broadcasting minister Ambika Soni, communications minister Kapil Sibal, law minister Salman Khurshid, Planning Commission deputy chairman Montek Singh Ahluwalia and minister of state for the Prime Minister’s Office V. Narayanasamy.