Sistema Shyam TeleServices Limited (SSTL) has written to the Department of Telecommunications (DoT) to turn down the reserve price recommended by the Telecom Regulatory Authority of India’s (TRAI) for spectrum to be auctioned in the 800 MHz band.

In its communication, the operator has requested DoT to peg the reserve price of pan-India CDMA spectrum at Rs 18.16 billion, two per cent lower than the base price set for the spectrum auction conducted in March 2013, and 80 per cent lower than the pan-India spectrum price of Rs 22.70 billion for the spectrum auctioned in the 1800 MHz band in February 2014.

SSTL has termed TRAI’s recommendations as ‘totally unexpected’, given that it was only in September 2013 that the regulator had suggested lowering base prices for spectrum to be auctioned in the 1800 MHz (by 37 per cent) and for 900 MHz, (by 62 per cent) bands. However, for the spectrum to be auctioned in the 800 MHz band, the regulator had recommended increasing reserve price by 47 per cent.

Earlier in February 2014, TRAI had suggested Rs 26.85 billion as the base price for a MHz of all-India CDMA spectrum. The suggested reserve price was higher than the reserve price of Rs 17.65 billion set for spectrum in the 1800 MHz band which can be used for providing 2G services. TRAI’s rationale for recommending higher reserve price for the CDMA spectrum was that this band can be used for providing high-end data and 4G services.

However, SSTL has claimed that the TRAI has used winning bids (of 900 MHz spectrum) for three circles to value 800 MHz band, which significantly increased its valuation. The auction of spectrum in the 900 MHz band was conducted only in three metros where companies submitted exorbitant bids to protect their existing businesses as their licences were coming up for renewal in these circles. Further, the operator has asserted that the spectrum in the 900 MHz band is fully harmonised throughout the world for 2G and 3G technologies, which is not the case for the spectrum in the 800 MHz band and therefore the three bands are not comparable in terms of valuation.