DoT may sell three blocks of 3G; bidders to pay 100% by March

Government may not get the targeted Rs 25,000 crore from the sale of radio waves needed for the third-generation telecom services

Spectrum crunch may force the government to allow only three private operators to offer 3G services in a circle and the successful bidders may have to make 100 per cent payment by March 10.

Even the empowered group of ministers (EGoM), headed by Finance Minister Pranab Mukherjee, in its last meeting, had taken a decision to this effect, say minutes of the meeting.

This would mean that the government may not get the targeted Rs 25,000 crore from the sale of radio waves needed for the third-generation telecom services if only three blocks are auctioned.

The minutes of the EGoM meeting held on December 21, 2009, say: “The Department of Telecommunications (DoT) will auction 3 or 4 blocks each of 2x5 MHz of pan-Indian (excluding one block assigned to BSNL/MTNL) 3G spectrum, subject to availability of spectrum.”

Immediately after the meeting, Communications Minister A Raja had announced that four blocks of 3G spectrum would be auctioned.

On the issue of payment to be made by the operators, DoT had cleared the air that the successful bidders would have to make the entire payment for 3G spectrum by March 10 and, in case of WiMax by March 20 this year.

The government has fixed the reserve price for 3G spectrum at Rs 3,500 crore for pan-Indian and Rs 1,750 for WiMax services. DoT is likely to issue notice-inviting applications on January 10 start the auction of 3G spectrum on February 12 and complete the process on March 5, 2010.

DoT has already got 10 MHz of spectrum from the defence and 5 MHz will be released by March 31 and another five MHz by August this year. This makes the total 20 MHz of radiowaves available with DoT.

Of this, one block has already been given to BSNL/MTNL, leaving spectrum sufficient for only three players.

“All the blocks of 3G spectrum to be auctioned would be allotted to successful bidders immediately after the auction and assigned for use from August 2010 simultaneously,” the EGoM minutes said.

Raja could not be contacted for his comments.

On the payment issue, DoT officials said the bidders would be asked to deposit 25 per cent of the bid amount by February 28 and the balance by March 10 in case of 3G. And for the Wimax spectrum, 25 per cent was to be paid by March and the remaining by March 20.