Auction for 3G spectrum begins smoothly

The 3G spectrum auction is off to a smooth start today with top telecom operators, including Bharti, Vodafone, RCom and Tatas, in the fray to acquire the radio waves that could fetch the government up to Rs 35,000 crore.

When contacted, a senior Department of Telecom (DoT) official confirmed the smooth beginning of the auction across 22 circles simultaneously.

Asked whether the Government would fetch its target of Rs 35,000 crore from the sale of spectrum, the official said it is difficult to guess any amount at this moment as it would depend on how aggressive the operators are in bidding.

There are nine mobile operators, including the big six, that would bid for the 3-4 slots on offer.

The final bidders, include Bharti Airtel, Reliance Telecom, Idea Cellular, Vodafone Essar, TTSL and Aircel for pan India.

The government is hoping to garner around Rs 30,000- 35,000 crore by selling 3G airwaves and broadband wireless access (BWA) spectrum through auction that started today and is expected to last up to three weeks. There is, however, no time limit or deadline for the closing of the auction.

The e-auction has started at 9 am and will remain open till 7.30 pm everyday till the process is complete.

The government has set base prices for all the 22 zones at Rs 3,500 crore and Rs 1,750 crore for BWA.

According to Sanjay Bhandarkar, NM Rothschild (India) head, the bidding process would stop only when the highest bids have been detected for all the circles simultaneously.

The auction for the BWA spectrum would be conducted two days after close of the 3G auction

The winners will be awarded spectrum in September, which means commercial operations of 3G services should be possible only by the end of 2010 or early 2011.

With 3G services, subscribers will be able to download hi-speed data and video streaming.

The DoT has said that 3G auction is designed to prevent predatory bids. According to the auction rules, bidders cannot name their price and they can only accept or reject the price posted in each round.

There will be multiple, round-the-clock auction simultaneously for 22 circles.

The bidders will have no control on increasing the base price, which can increase from 10 per cent to 1 per cent after each round.

If there is one bidder more than the number of spectrum slots, the increase would be 5 per cent and if there are two bidders more than the base would be raised by 10 per cent.

However, if the number of bidders is the same as the number of slots, the price would go up by only 1 per cent, as per the auction rules.