TRAI has released its recommendations on the reserve price for auction of FM channels in new cities in the upcoming Phase III auctions. The MIB had, in December, asked TRAI to give its recommendations on the reserve price for 264 (227+37) fresh cities.
The latest recommendations come post a March meeting between stakeholders and TRAI held in Delhi. “It is worth noting that need for revision of RPs (reserve price) for these cities has arisen as the methodology provided in the Phase III policy guidelines for determining the RPs for new cities yielded inconsistent/irrational results,” stated TRAI in the document.
In brief, TRAI recommends that RP for FM radio channels in a new city be set equal to 0.8 times the valuation of FM radio channels in that city. TRAI has also given suggested reserve prices for the 253 new cities. For example, Amravati in Maharashtra has a suggested RP of Rs 3.1 crore, while Daman has a suggested RP of Rs 1.24 crore.
TRAI has also recommended that the RPs of 11 border cities in the ‘Others’ category in Phase III should be priced at Rs 5 lakh per channel.
According to TRAI, the RPs have been determined as the arithmetic mean and depending on factors like population of the city, per capita gross state domestic product, density of FM radio receivers and per capita gross revenue earned by existing FM Radio operators.