3G auction on time, 4 slots / circle for private companies

The bidding process for 3G (third generation) telecom services will proceed as per schedule and up to four private players in each circle can offer 3G services, a meeting of the empowered group of ministers (EGoM) headed by finance minister Pranab Mukherjee is learnt to have decided on Monday.

Although the government may stick to the auction timeline (perhaps with a slight delay), there is still a question mark over when the exchequer would get the 3G revenue. Since the spectrum required for operating 3G services would be available only around August 2010, telcos may not want to pay in full till they are actually allocated airwaves.

As per the existing calendar of the department of telecommunications (DoT), 3G auction is scheduled to start on January 14, 2010.

The UPA government is keen to hold 3G auctions this financial year as it is targeting to raise Rs 30,000-35,000 crore from the process to help bridge the fiscal deficit. But, if the auction revenue doesn’t come this financial year, the government’s math will go wrong as it has officially budgeted Rs 25,000 crore from 3G and Wimax bids by March 31, 2010.

Asked if the winning bidders would be required to pay in full immediately after the auction, a senior DoT official told this newspaper, “Those details would be available in the notice inviting applications.” 

“Let the ministry finalise the minutes of the EGoM meeting first,” another official said.

Sources in the government said there was no certainty the entire bid money can be raised this financial year itself.

As the defence ministry was talking of vacating 3G spectrum in phases, a DoT proposal talks of taking only the bid deposit this financial year.

The remaining amount can be paid by the winning telecom operators at the time of “actual assignment of spectrum”, it says. Bid deposit is 25% of the actual bid amount, the note states.

The EGoM decision, that 3G auction is on schedule, came on the date which was supposed to have been the deadline for the industry for submitting applications for participating in the 3G process.

Communications minister A Raja, a member at the EGoM, told the media after the high-powered meeting, that 3G auction would be on schedule and that four slots in each circle would be put up for auction. This is besides one slot reserved across circles for the state-owned telcos BSNL or MTNL. According to Raja, all the 3G spectrum would be allocated simultaneously to the winning bidders around August 2010, when the defence forces vacate the same.