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3G Auction...Pan-India price nearly doubles

Bids for one set of pan-India 3G mobile licences reached Rs103.48bn (US$2.33bn), or 195% above the base price, on the 20th day of the auction

May 04, 2010 10:06 IST | India Infoline News Service
Well, the bounty that the Government would get from the auction of third-generation (3G) spectrum keeps climbing. What's more, at Monday's close, the Centre is expected to get Rs417.66bn as against projection of Rs350bn from the combined 3G-BWA auction.

Bids for one set of pan-India 3G mobile licences reached Rs103.48bn (US$2.33bn), or 195% above the base price, on the 20th day of the auction, government data showed. The base price for one set of pan-India 3G licences had been set at Rs35bn.

As per the details given by the Department of Telecommunications (DoT), six more Clock Rounds were completed on Monday. With this, the total number of Clock Rounds completed to date has come to 116. The 3G auction started on April 9 and is still underway. Auction for BWA will start after two days of the close of 3G auction.

"The revenue from 3G auction alone may cross Rs400bn. Revenues from 3G and Broadband Wireless Access (BWA) spectrum put together may touch Rs500-550bn," Telecom Minister A Raja was quoted as saying last week.

Mumbai and Delhi continued to be among the most sought-after circles with highest bids of Rs17.06bn and Rs16.54bn, respectively. The reserve price for both the Mega Metro circles is Rs3.2bn.

Bidding activity was raised from a level of 80% to 90% for the first time on Friday and the real price will emerge when this is increased to 100%. The 3G auction would continue till the available number of slots is equal to number of bidders in all 22 circles simultaneously.

Out of a total of 22 circles for the 3G spectrum, 17 have three slots, while in rest of the five circles, four blocks of spectrum are available.

India's fiscal deficit may come down to 5.2% of GDP from the estimated 5.5% of GDP. The Government has pegged the fiscal deficit at Rs3.81 lakh crores.

Raja also said last week that the 3G auction will be completed in a day or two. "The 3G auction is being held successfully....it will be completed in one or two days," he said during Question Hour in the parliament.

The e-auction began on April 9 and will continue till such time that demand equals supply, Raja said. The successful bidders would be allotted air waves in September after the spectrum is vacated by the defence forces.

The price for 5 MHz of 3G spectrum in a single circle is more than the 2G revenue of Rs16.51bn for 4.4 MHz of pan-India 2G spectrum across 22 circles or a total of 96.8 MHz of 2G spectrum. Total revenues from the sale of 120 licences for 2G fetched roughly Rs90bn. In contrast, a single pan-India 3G slot on Monday closed at Rs103.48bn.

Many of the companies that received 2G licences in early 2008 later sold stakes to foreign companies at huge premiums. Telecom minister A. Raja has come under fire for allocating spectrum in 2008 at a price discovered in 2001, while the Telecom Regulatory Authority of India (TRAI) suggested auctioning the airwaves.

The Comptroller and Auditor General, the Central Bureau of Investigation and the Central Vigilance Commission are investigating the awarding of licences to new entrants then.

Meanwhile, a committee on 2G spectrum, headed by DoT additional secretary Subodh Kumar, has recommended in its report submitted to the department last year, that all spectrum, apart from start-up airwaves, be auctioned. The report is under discussion at TRAI.

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