India may sell just three 3G slots

Ruth David
12 Jan 2010

India may sell only three 3G slots in an auction because of a shortage of spectrum.

A draft document on the long-awaited auction also says winning bidders will be able to offer commercial 3G services only from Sept 2, 2010.

The government plans to offer up to three blocks of 2x5 Mhz of paired spectrum in the 2.1-Ghz band in each of the country’s 22 telecom circles, according to the draft Notice Inviting Application. State-run carriers Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telecom Nigam Limited (MTNL) were last year granted one 2x5 Mhz block of spectrum each. The document, containing all the legal details of the proposed auction, is expected to be released by the Department of Telecom this week.

Last year, telecom ministry officials had spoken of at least four firms being given 3G spectrum. But the lack of spectrum because of a tussle between the department of telecom and defense ministry has resulted in a reduction in the number of slots being auctioned. The date for the auction – originally set for December 2008 – is now proposed for February 12. The most recent date was Jan 14.

Winning bidders will have to deposit 25% of their bid amounts within five calendar days of the auction date and the remainder of the money within 15 days, according to the draft document.

The government was hoping to net revenues between 250 billion rupees ($5.53 billion) and 350 billion rupees in the year ending in March from the auction.

Analysts say the reduction in the number of slots being offered may not hurt the government’s revenue plans since the artificial scarcity being created will drive the price of much-needed spectrum even higher.

Some telecom circles already have as many as 10 operators and most need new spectrum. Incumbents are already dealing with dropped calls and other problems because of congested networks.

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