India expects to raise $10 billion from mobile airwave auction

MUMBAI (Reuters) - India said on Monday it expects to raise 648.40 billion rupees ($10 billion) from a new auction of mobile phone airwaves, intended to help carriers expand their services in a fast-growing market and the government to bolster its strained finances.

The auction, likely to be held next month, comes at a time when weak tax receipts in a sluggish economy are making it tough for India to meet its ambitious fiscal deficit target of 4.1 percent of gross domestic product for the year to March, 2015.

Of the estimated revenue of $10 billion, the government expects to book 160 billion rupees, or a quarter of the total proceeds, in this fiscal year, said an official statement issued after the cabinet approved the auction guidelines.

India, which traditionally sold airwaves to run mobile services through a state-selection process, switched to an open auction in 2012 after a scandal over mis-selling of permits that led to cancellations of many telecoms licenses.

India's mobile market is the world's second biggest, with more than 900 million mobile phone users, and carriers including sector leader Bharti Airtel and Vodafone's local unit need more airwaves to expand their operations.

The cabinet on Monday approved a base price of 36.46 billion rupees for every megahertz (MHz) of nationwide spectrum in the 800 MHz band to be auctioned, said the statement.

The base price has been set at 39.80 billion rupees for the relatively more efficient 900 Mhz band airwaves, excluding Delhi, Mumbai, Kolkata and Jammu & Kashmir, and 21.91 billion for the 1,800 MHz band except for in Maharastra and West Bengal.

A total of 380.75 MHz in these three airwave bands will be put to auction, said the statement, adding details on the 2,100 MHz airwaves will be announced later and the auction for the same may happen simultaneously.

($1 = 63.4900 rupees)

(Reporting by Nivedita Bhattacharjee; Editing by Sumeet Chatterjee and David Holmes)