3G delayed as EGoM fails to fix auction date & modalities

Auction of 3G (third generation) telecom spectrum is set for yet another delay, with sources saying it could be pushed beyond this financial year.

The Empowered Group of Ministers (EGoM) headed by finance minister Pranab Mukherjee met in the capital on Tuesday to resolve some of the thorny issues, but the meeting remained inconclusive on 3G dates, number of slots for telcos and payment modalities.

The government was planning to hold the 3G and Wimax auctions around mid-February, after having deferred them several times.
The EGoM met after the Department of Telecommunications (DoT) failed to issue the critical notice inviting tender for the auction on Monday.

DNA had reported that there was yet another hiccup in the 3G path.

“Some of the issues between Defence and the DoT have not been resolved,” communications minister A Raja said after the EGoM meeting. He indicated that further consultations were likely before finalising the auction date.

In an earlier meeting, held in December, the same EGoM had decided that 3G spectrum would be given to four winning bidders in every circle, apart from one reserved slot for state-owned telcos BSNL or MTNL. A decision was also taken in that meeting that defence forces would vacate the spectrum by August 2010.

But surely, all is not well with the proposed 3G roadmap. A draft DoT note accessed by the media on Monday showed that only three private operators can be given 3G spectrum in each circle (against the EGoM recommendation of four each). Clearly, DoT and others (mainly the finance ministry) are not on the same page as far as 3G is concerned.

Currently, the thinking within the finance ministry is that spectrum should get its worthwhile value. “It’s not a distress sale,” a ministry official recently said on the 3G auction. Spectrum is a ‘scarce’ resource and the government should try to maximise its revenue from the 3G auction, the official said.

If the DoT proposal of only three private slots for 3G across circles is accepted, the government would get that much less in spectrum money. The government, faced with a steep fiscal deficit (at 6.8% of the GDP), wants to maximise revenue from 3G auction.

It is believed that the government would rather delay the 3G spectrum auction than hold it in a hurry and get a low price for the scarce and premium resource.

As of now, the government is targeting revenue worth Rs 30,000-35,000 crore from the bidding process.