A pedestrian walks past a Telenor store in central Stockholm
A pedestrian walks past a Telenor store in central Stockholm October 26, 2007.REUTERS

The Supreme Court on Tuesday extended the deadline that it had set for the government to carry out a fresh 2G auction based on the Telecom Regulatory Authority of India (TRAI) recommendations.

The apex court bench comprising KS Radhakrishnan and Justice GS Singhvi ordered the government to complete the fresh auctioning of 2G spectrum licences by August 31, which was June 2 earlier and have allowed affected companies to operate till September 7 with the cancelled licences.

Meanwhile, the Supreme Court refused to grant 400 days as sought by the government to execute the fresh action of 2G spectrums.

According to the Supreme Court directions, the TRAI on Monday proposed new high reserve prices for action of 2G licences in 22 circles. The new price proposal by TRAI comes as a fresh blow to the telecom firms, which are already facing the licence cancellation.

The TRAI recommended an auction starting price of 36.22 billion rupees for every megahertz (MHz) of nationwide spectrum in the 1800 MHz band, compared to 3.8 billion rupees in the 2008 sale.

The TRAI's proposal over the 2G spectrum has received thumps down by the critics, who forecasted that it would blight the interest of investors in telecom sector.

Further, the telecom analysts said that the high price of spectrum will put monetary pressure on the operators leading them to change their tariff prices, eventually making tele communication a costly affair for the customers.

If the government inducts TRAI's suggestions in auctioning fresh licences, then a few telecom companies have to pay steep prices for the same spectrums that they brought in 2008 for a quite lower price if it wants to carry on the business. This would deal a significant blow to overseas service providers like Telenor and Sistema.

Meanwhile, the new spectrum pricing will make it very expensive for new entrants.

The Supreme Court in a landmark judgement on Feb 2, 2011, had cancelled as many as 122 licences in 22 areas that were allotted by jailed former Telecom Minister A Raja in 2008. The apex court also asked the government to carry out a fresh action on the guidelines of TRAI.

Raja was accused of allotting the 2G spectrum blocks at a throw way prices as he practiced first-come-first-serve policy in a deal to favour few private companies, which has caused a whopping loss of Rs 1.76 lakh crore to the exchequer has indicted by the Comptroller and Auditor General (CAG).

(With inputs from Reuters)

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