India to raise $9.9 billion in telecoms spectrum auction - minister

NEW DELHI (Reuters) - India is set to raise about 611.61 billion rupees from the auction of telecommunication spectrum, the telecoms minister said on Thursday, far exceeding the government's target as it tries to narrow its budget deficit.

The government's initial target was to raise at least $1.8 billion from the auction. Still the initial revenue would be much lower as companies need pay only a quarter to a third of the winning auction price upfront and the remainder through to 2026.

"The government is happy and we will see a smile on the face of the finance minister," minister Kapil Sibal told reporters.

Finance Minister P. Chidambaram faces a challenge to meet the budget deficit target for the current fiscal year ending in March amid a shortfall in tax collections and revenue receipts from divestment of stake in state companies.

Eight companies, including Bharti Airtel Ltd , Vodafone Group Plc's India unit and Reliance Industries Ltd , had applied to bid in the auction of 900 megahertz and 1800 megahertz band airwaves.

After 10 days of the sale, bids in the 900 megahertz band, which is being auctioned in just three cities, totalled about 236 billion rupees, said a government official who declined to be named as the auction results are not public yet.

Bids in the 1800 megahertz band were about 377 billion rupees, he said. Details on which companies won airwaves were not immediately available.

The stakes are especially high for Vodafone and Bharti which use 900 Mhz, but which will see their rights expire in November unless they buy in the auction.

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.

The government's spectrum auction in November 2012 and March 2013 flopped as most bidders stayed away from the sales, complaining the floor bid prices were too high. Eight bidders applied to participate in the current auction after the government sharply cut auction reserve prices.

(Reporting by Devidutta Tripathy; Writing by Aradhana Aravindan; Editing by Elaine Hardcastle)