3G spectrum auction may not fetch Rs40,000 cr

3G spectrum auction may not fetch Rs40,000 cr


New Delhi: Finance Ministry’s hopes of garnering about Rs40,000 crore from the sale of spectrum for 3G mobile services may be dashed as most of the operators are unlikely to bid beyond the reserve price of Rs2,200 crore.

According to assessments within the Department of Telecom (DoT), maximum 5-7 operators would bid for 3G spectrum and the amount would remain within Rs2,200-2,500 crore.

Going by this, the government is likely to get a maximum of Rs17,500 crore in stead of an earlier estimate to raise 40,000 crore from the auction leaving a gap of over Rs20,000 crore.

Sources said any pan-India bid beyond Rs2,500 crore would make the operations financially unviable and services costlier to the subscribers.

Although the DoT had earlier earmarked 60 MHz spectrum for 3G mobile services to accommodate 10-12 service providers, but sources said maximum seven operators are likely to put in bids, including two international players.

In fact, keeping this in mind the Finance Ministry had earlier asked DoT to consider increasing the reserve price to Rs2,500 crore from Rs2,200 crore but the proposal was turned down by DoT saying ascendingorder of auctioning process would automatically give market determined price.

Source in department said all five leading cellular operators Bharti Airtel, Vodafone-Essar, Idea Cellular, Reliance Communications and Tata Teleservices are likely to put their bids while the scenario among the international players is not yet clear.

US-based AT&T is a potential candidate to bid for 3G spectrum but would have to form a joint venture with an Indian entity before rolling out the services as permitted by the FDI guidelines.

“The government has already started the process to appoint e-auction agency to conduct auctioning and hopes to end the process by end of November this year," senior DoT officials said.

Asked how many licences are likely to be issued, officials declined to comment saying Communication and IT Minister A Raja had announced 10-12 players and the DoT still maintains it.

Officials said enough spectrum would be available with the DoT to give 5MHz spectrum each to all successful candidates for 3G services.

Going by the schedule prepared by the DoT, 3G services should start in the first quarter of next financial year by the private players while the PSUs BSNL and MTNL have already announced their plans to start services from December this year.