India 3G auction likely next fiscal year

A multi-billion dollar auction of 3G spectrum to help plug India's budget deficit may only kick off in the next financial year, Telecommunication minister Andimuthu Raja said on Monday.

Raja said the government would give formal notice of the oft-delayed auction within a week but bidding might only start after March.                                           

The government is banking on revenues of 350 billion rupees ($7.6 billion) from the auction this year and delays could widen its fiscal deficit, running at a 16-year high. Asked whether the auction would be carried out in the current year, Raja said: "I can't assure that."                                           

The auction was delayed by differences between government departments over pricing wireless radio spectrum and on the availability of spectrum to be auctioned, but officials said last week the issues had been resolved. An economist said the delay was unlikely to have a "substantial" impact on the deficit.

"The deficit this fiscal has already been factored in at 6.4% (of the gross domestic product) because of the base year revision," said NR Bhanumurthy of the National Institute of Public Finance and Policy, a New Delhi-based think-tank.                                           

"So if 3G spills over to the next (financial) year, the FY10 deficit may at worst be 6.6% or thereabouts."  

FIRMS IN WAITING                                           
India's leading telecoms firms Bharti Airtel, second-ranked Reliance Communications and No. 3 Vodafone Essar are keen to participate in the auction for all-India spectrum, while Telenor's India unit has said it will bid in select zones.  

AT&T, which has been trying to get a foothold in the world's fastest-growing wireless market, could be a bidder while media have reported that Australia's Telstra and South Korea''s SK Telecom might also be interested.                                           

Analysts expect an all-India spectrum will cost between $1 billion and $1.5 billion for each phone firm, and rolling out the high-speed networks could cost billions of dollars more. 

Separately, the minister said plans to introduce mobile number portability to allow users to retain their phone number when they switch operators would be further delayed by two months to the end of May.