3G spectrum auction put off to next fiscal

According to senior officials in the Department of Telecom, Law Minister Veerappa Moily, who is member of the EGoM, has opined that the auction should he held when the spectrum is available.

Telecom Minister A Raja could not be contacted immediately for his comments. Officials however, said that the auction is expected to take place in August-September this year. It is pertinent to mention that the Ministry of Defence had agreed to vacate the spectrum only during middle of this year.

The Empowered Group of Ministers, headed by Finance Minister Pranab Mukherjee, had decided to allow four private telecom firms for the next generation mobile telephone services (3G) and had made a provision for garnering up to Rs 35,000 crore from the sale of airwaves in the current fiscal.

The postponement of 3G spectrum auction to 2010-11 is likely to have some adverse impact on the government's finances and the fiscal deficit which is pegged at 6.8 per cent of the GDP.

The EGoM on 3G spectrum held several meetings in the past two months showing urgency to hold auction for the airwaves despite differences between ministries of telecom and defence over the number of blocks to be auctioned.

The EGoM had also decided that spectrum would be alloted to the winners simultaneously in August to maintain a level- playing field and the same was endorsed by all the members, including the law minister, sources said.

Last week, the government had also allowed prospective 3G bidders to raise funds from domestic markets, which could later be refinanced through debts raised abroad making it easier for the firms to arrange finances.

The external commercial borrowings (ECBs) norms were relaxed considering the short window available between the date of application for the 3G auction and the date of payment by successful bidders.

Sources also said that some of the leading Indian telecom firms were pushing for 3G spectrum auction to next financial year in view of the global slowdown and increased competition which have put pressure on their revenues.

Asked to name the companies who had approached the government to postpone the auction to next fiscal, sources declined to give details.

The two telecom PSUs (BSNL and MTNL) have been given the 3G spectrum and both are offering services across the country. with MTNL in two metros of Delhi and Mumbai and BSNL in rest of India.