Government holds pre-bid talks on 3G auction

The auction process for third generation and WiMax spectrum began today with the Department of Telecommunications holding a pre-bid conference for prospective bidders. During the meet, officials from the communications ministry will seek to address all queries regarding the auctions, which are now scheduled to begin in mid-January.

It is not known how many international players are participating in the meet; but this will be a pointer towards the number of international telecom companies interested in entering the Indian telecom market through the 3G route.

Hoping to attract large participation from the international players currently not present in India, the government has allowed the foreign bidders to first bid for the spectrum all by themselves and later form a joint venture with an Indian partner, as there is a 74 per cent cap on foreign direct investment (FDI) in the telecom sector.

The government is hoping to garner Rs35,000 crore from the auction to shore up its budgetary deficit, and it has already factored this amount into the current year's budget.

According to the auction guidelines, a bidder would have to pay a pan-India reserve price of Rs3,500 crore for 3G spectrum, and Rs1,750 crore for WiMax. There would be four slots available to private operators, while one slot in each circle has been reserved for the state-run telecom companies, Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd.

However, the government's aim of auction four slots of 3G spectrum to private operators in all circles may not be reached, as the official document that lists all information regarding the upcoming sale says that there is not enough spectrum to accommodate four operators in many circles. There will only be two 3G slots in the states of Delhi and Gujarat, while there are no third generation airwaves for auction in the circles of Rajasthan and all northeast states (except Assam).