Finmin recommends doubling reserve price for 3G spectrum

Finmin recommends doubling reserve price for 3G spectrum
PTI
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First Published: Thu, Jan 01 2009. 09 53 PM IST

Guidelines: The move could delay the start of 3G telephony in India. Andy Shaw/Bloomberg
Guidelines: The move could delay the start of 3G telephony in India. Andy Shaw/Bloomberg
Updated: Thu, Jan 01 2009. 09 53 PM IST
New Delhi: The finance ministry on Thursday asked the department of telecom, or DoT, to double the lowest acceptable price for use of 3G radio spectrum, which could delay the start of 3G mobile telephony services in India.
“The reserve price may be increased from Rs2,020 crore to Rs4,040 crore for a pan-India allocation of two blocks of five MHz of 3G spectrum,” the ministry said in a note to telecom secretary Siddartha Behura.
Guidelines: The move could delay the start of 3G telephony in India. Andy Shaw/Bloomberg
Mobile 3G phone services enable high-speed data access, allowing users to surf the Internet or download content at speeds faster than those supported by current cellular technologies. The ministry has asked DoT to incorporate the revised prices before placing its proposal before the cabinet committee on economic affairs, or CCEA, whose approval is required before 3G air waves are opened for auction.
DoT officials, speaking on condition of anonymity, said any change in the norms regarding reserve price of 3G spectrum may require the Telecom Regulatory Authority of India’s nod, which will delay the process. Early this week, the department had issued a revised schedule to auction 3G spectrum. The finance ministry has also asked to double the reserve price for wireless broadband services, also known as WiMAX, to Rs2,000 crore for all-India allocation, against DoT’s recommendation of Rs1,000 crore. The ministry has also sought justification of a clause which says that “the Government of India reserves the right to cancel the bidding process or disqualify any bidder without assigning reason,” asking how this would be implemented.
Officials said that a final decision on 3G spectrum issues would be taken by CCEA.
Other than the reserve price, the finance ministry has kept the rest of the eligibility parameters unchanged. The minimum net worth of companies required for bidding for all-India 3G licence will remain Rs1,380 crore, its note said.
With the revised reserve price, the government may garner up to Rs60,000 crore from 3G radio spectrum auction. This, however, could not be immediately confirmed by DoT officials. According to existing 3G guidelines, foreign firms can bid on their own, but will have to form a joint venture with a maximum 74% stake with an Indian company before starting services.
The government has also relaxed the external commercial borrowing guidelines to permit such loans up to $500 million (Rs2,435 crore) to finance spectrum acquisition fees.
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First Published: Thu, Jan 01 2009. 09 53 PM IST
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