New Delhi: A proposed auction of spectrum, or airwaves, for so-called third generation (3G) mobile phone-services could be delayed at least until mid-March from the proposed date of 30 January, pending a cabinet decision on issues such as the floor price for the sale and the range of radio frequency to be offered.
Only after the cabinet committee on economic affairs (CCEA), scheduled to meet on Thursday, approves the 3G policy that deals with such issues can the department of telecommunications (DoT) go ahead with the bidding.
Approval awaited: Communications minister A. Raja. On Monday, DoT had said it was postponing the bids, but had not set a new date. Manpreet Romana / AFP
“Auction of 3G spectrum will be done in two months after approval of cabinet,” according to a note prepared by DoT for cabinet approval, and reviewed by Mint.
That would push the auction to around mid-March, although a precise sale date was not immediately known. On Monday, DoT said it was postponing the bids, but had not set a new date.
“The new date will be decided after the CCEA takes a decision and considers the whole issue,” Akshay Rout, a spokesman for the communications ministry, was quoted as saying by Reuters.
A 3G phone service provides data access at speeds faster than those supported by mobile phone service technologies currently deployed in the country, such as CDMA (code division multiple access) and GSM (global system for mobile communications).
The auction has been keenly awaited by international phone companies such as AT&T Inc. and Deutsche Telekom AG as also dominant domestic players Bharti Airtel Ltd and Vodafone Essar Ltd. Foreign telecom aspirants see the 3G auction as a means to enter India’s mobile phone services market, the world’s second largest and fastest growing by customers.
The Union government expects to raise Rs30,000-40,000 crore, minister of state for communications Jyotiraditya Scindia had said late last year when the 3G bidding policy was announced. This amount could reduce the government’s budgeted revenue deficit by at least 40%.
A telecom expert was critical of the delay in the 3G bidding process. “The more the auction is delayed, the more it hurts the government and the auction,” said Mahesh Uppal, a director at telecom consultancy Com First (India) Pvt. Ltd. “At present, the incumbents are accruing around 10 million subscribers every month. The more subscribers that are added while the auction is delayed, it leads to the sector and the auction becoming less attractive to the new foreign operators.”
But an operator said it gives more time to companies such as his to prepare their bid strategy if they decides to participate in the auction. “We have never said publicly that we will enter the 3G auction as we have not decided whether we will or not as yet. It gives us more time to make our strategy and to take other decisions in regard to 3G,” said Vsevolod Rozanov, president and chief executive of new operator Shyam Telelink Ltd, which is rolling out a CDMA-based phone network across India.
Ahead of the CCEA meeting, DoT has decided not to levy a so-called administrative charge, equivalent to 2% of licence fee annually, on successful bidders for 3G services. The administrative charge had been recommended by the Telecom Regulatory Authority of India.
In deference to a finance ministry suggestion that the reserve price in the auctions be doubled to Rs4,040 crore for pan-India spectrum rights, DoT proposed three options.
DoT said the options were to retain it at the current Rs2,020 crore, double it, or increase it to Rs3,540 crore. The last option is based on a doubling of the reserve price for Delhi, Mumbai and so-called category A circles to Rs320 crore each, increasing it 1.5 times for Kolkata and category B circles to Rs120 crore each, and leaving the minimum price for category C circles unchanged at Rs40 crore.
Reuters contributed to this story.