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Business – India;3G winners may have to pay 25% up front

Joji Thomas Philip

NEW DELHI: Successful bidders of third-generation (3G) spectrum in the upcoming auctions, scheduled to begin on January 14, may have to pay only 25
per cent of the bid amount initially and can pay the remaining in the next financial year when they receive the airwaves.

Besides, the uncertainty over the availability of 3G spectrum may also result in just one telecom company being awarded 3G frequencies immediately after the auctions while other telcos may be forced to wait up to September 2010.

The spectrum uncertainty may also result in the January auctions being limited to three players, according to an internal note of the Department of Telecom (DoT).

The government had earlier announced that it would auction four slots of 3G spectrum to private operators in all circles while adding that the full payments would have to be made within 15 days (January-end). Plunging the 3G auctions into further uncertainty, the DoT now plans to ask telcos to pay only the bid deposit (25% of the bid amount) as the government is unsure as to when 3G airwaves can be allotted to operators, government officials working on the proposed spectrum sale said.

The DoT internal note also adds that one successful bidder will be awarded 3G spectrum immediately after the January auctions, another will be given these airwaves in July 2010, while the third winner will be given these frequencies in September 2010. This is because, DoT officials say that the armed forces will vacate 5 MHz (one slot) of 3G spectrum in July and an equivalent amount in September 2010.

But, this note does not mention as to when the fourth player will get airwaves after the auction. The base price for the 3G spectrum auction is Rs 3,500 crore for pan-India airwaves. The government has already given 3G airwaves to state-owned telco BSNL and MTNL and has exempted them from participating in an auction process.

These developments come even as the DoT failed to keep the December 8 deadline for issuing the notice inviting applications (NIA) for sale of 3G airwaves. ET had first reported in its edition dated December 8 that the notice inviting bids for the upcoming third generation (3G) spectrum auctions would not be issued on Tuesday and would be delayed till the month-end, while also adding that the sale of airwaves scheduled to begin on January 14, may now be pushed to the end of February or early March 2010.

The NIA will be a legal binding document on the auction and would specify all details regarding the sale of airwaves, including the exact availability of 3G spectrum in each circle and the specific frequencies bands that would be awarded to the winners.

“With reference to the revised information memorandum issued on 23 October 2009, government is in the process of finalising the details to be included in the Notice Inviting Applications (NIA) which are being fine tuned. The NIA will therefore be issued shortly,” the DoT said in an notification on its website on Tuesday.

Justifying its move to seek only the bid amount, or 25 per cent of the bid amount, the internal note of the DoT said: “Good auction practice requires that only spectrum that is available should be auctioned. As there is maximum of 20 MHz available from defence by September 2010, 5 MHz out of this should be retained for BSNL/MTNL and 15 MHz (3 blocks of 5 MHz each) could be auctioned in this fiscal year with the provision that bidding would be for three blocks of spectrum pan-India. “

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December 9, 2009 - Posted by | Uncategorized |

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