Raja fixes timelines for 3G auction

Roadmap comes nine days after Finance Minister Pranab Mukherjee raps DoT for delay

Just a few days after Finance Minister Pranab Mukherjee sent a strongly-worded letter to Communications Minister A Raja that there should be no further delay in the auction of 3G spectrum, the Department of Telecommunications (DoT) today released the roadmap for the auction.

According to the information memorandum, the auction will start on January 14. This is more than a month’s delay over the earlier deadline of December 7. The successful bidders will have to pay a part of the bid money within five days of the auction, and the remaining amount in another 15 days.

The list of those who are eligible to bid will be put out on January 7. In order to familiarise potential bidders with the auction, a mock auction will take place on January 11 and 12.

The revised information memorandum, however, pegs the auction to the availability of 3G spectrum with DoT currently. It plans to give 5MHz of spectrum to each player which includes state owned Bharat Sanchar Nigam (BSNL) as well as MTNL. The state-owned corporations have already been given 3G spectrum.

As a result, in Delhi and Gujarat, there will be only two blocks for auction, while Uttar Pradesh (West) and Himachal Pradesh will have three blocks each. In all the other telecom circles, four blocks will be auctioned to private players. There are about 22 circles in the country, but auction will be held in 20 circles as the North-East and Rajasthan have no blocks for auction.

The government had earlier planned to give five blocks for auction (which includes BSNL and MTNL) in each circle in the auction for 3G spectrum. However, to do so it would have required 25 MHz of spectrum in each circle, which, according to DoT, is not available at the moment. This is because the ministry of defence has not vacated spectrum, which it had committed under a memorandum of understanding with DoT.

The defence ministry has said that it will not be able to vacate the spectrum before June 2010. This had prompted some DoT officials to suggest that the auction should be delayed. As a result, DoT delayed the issue of the information memorandum which was supposed to be released earlier on September 29.

But Mukherjee, in his letter of October 15, made it clear that there was no scope for any delay in the auction, especially as the government wants the revenues from the auction to accrue in the current financial year. The government, in the Union Budget, had earmarked over Rs 35,000 crore from the auction of 3G auction, which is crucial if it wants to contain its fiscal deficit.

The Group of Ministers set up to formulate the policy for 3G auction has fixed a base price of Rs 3,500 crore for a pan-India licence. Finance Minister Mukherjee was the chairman of this group.

Telecom service operators, on their part, said that the method might create some problems. “In many lucrative areas like Delhi, DoT will have to go for auction again. The base price would be of the highest bidder earlier. So bidders this time may have to fork out much more,” said a senior executive of a leading telecom company which is planning to bid in the auction.

“The government should conduct 3G auctions for all slots simultaneously. The successful bidders can be put up in a queue and awarded spectrum later when it is available,” Com First (India) Director Mahesh Uppal said.