New Delhi: For once adhering to its timeline, the department of telecommunications (DoT) on Tuesday published a list of pre-qualified bidders in the auction of spectrum for third-generation (3G) mobile phone services and broadband wireless access (BWA), fuelling expectations that the long-awaited sale may finally take place next month.
All nine applicants for 3G— including Bharti Airtel Ltd, Vodafone Essar Ltd, Reliance Telecom Ltd and Idea Cellular Ltd—and 11 applicants for BWA qualified to take part in the auction, according to a statement posted on the website of DoT.
The government collected a total of Rs5,806.25 crore in earnest money from the potential bidders. Each applicant seeking 3G spectrum across the country paid Rs550 crore; those that want a pan-India presence in broadband wireless access paid Rs252.50 crore each.
It’s the first time in more than two years since the Indian government has looked into auctioning spectrum that it has been able to stick to a given timetable. The next step in the process is a mock auction on 5-6 April, followed by the start of the 3G auction on 9 April. The broadband wireless auction will take place two days after the 3G spectrum sale closes.
Graphic: Yogesh Kumar/Mint
Of the nine telecom companies that applied for 3G spectrum, which would enable them to offer high-speed data transfer and multimedia services, six sought to bid for radio waves across all 23 telecom circles, or operating areas, seeking a pan-India presence.
These six are Bharti Airtel, Reliance Telecom, Idea Cellular, Tata Teleservices Ltd, Aircel Ltd and Vodafone Essar. Videocon Telecommunications Ltd, S Tel Pvt. Ltd and Etisalat DB Telecom India Pvt. Ltd will bid to operate in a limited number of areas.
Similarly, of the 11 potential bidders for broadband wireless spectrum, eight applied for spectrum across the country.
The eight are Bharti, Idea Cellular, Aircel, Infotel Broadband Services Pvt. Ltd, Qualcomm Inc., Reliance Wimax Ltd, Tata Communications Ltd and Vodafone Essar.
Firms that have applied to bid for a limited number of operating areas are Augere (Mauritius) Ltd, Spice Internet Service Provider Pvt. Ltd and Tikona Digital Networks Pvt. Ltd.
Reliance Telecom and Reliance Wimax are both part of Reliance Communications Ltd, India’s second biggest mobile phone firm.
The government wants to use the auction proceeds to reduce its fiscal deficit, which it will plug by borrowing Rs4.57 trillion in the year starting 1 April. The auction is expected to raise Rs35,000 crore.
The reserve price for a slot of pan-India 3G spectrum has been set at Rs3,500 crore and that for broadband wireless radio waves at half as much.
But the winning bids are expected to be in multiples of the reserve price because applicants by far outnumber the number of slots of both kinds of spectrum available.
“While the auction may happen on schedule, the start of commercial services may take a little longer as the defence forces may not be able to vacate the spectrum they have promised to in time,” said a Mumbai-based analyst with an international brokerage firm, who declined to be named because he isn’t authorized to speak to the media.
“Till the spectrum is vacated, none of the operators would be able to start commercial operations of the services,” the analyst said.
The winning bidders of the auction will be allocated the spectrum only in September by when the defence forces are expected to vacate the radio waves they are using.
That’s dependent on state-run Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd building an alternative optical fibre cable network for the defence forces in time.