For all the noise they generated, the 3G spectrum auctions are unlikely to come about this fiscal. The department of telecommunications (DoT) is thinking of postponing the auctions by three months in view of the global liquidity crunch. Earlier, the auctions were being planned in mid-January. This means the Rs 40,000 crore the government was looking to garner from the auctions is not going to accrue to it in the current fiscal.
The reason behind the DoT move is that the current market conditions would constrain global telecom firms from bidding in the auctions. ?These companies want the markets to improve and also need time to prepare their business plans,? a DoT official told FE on conditions of anonymity.
As brought out by an FE analysis earlier, global telecom firms would have to raise around Rs 8,000 crore for the auctions and pump in another Rs 9,000 crore to roll out the services across circles.
According to DoT sources, a final decision about re-scheduling the auction would be taken in consultation with the finance ministry. As reported by FE, the finance ministry was keen that the auction process be completed by the end of December but DoT set a mid-January deadline citing holidays during December end, which would not be congenial for global telecom players.
The government estimates raising up to Rs 40,000 crore from the 3G auction. Though last week, the Reserve Bank of India allowed telecom firms to tap the external commercial borrowing (ECB) route for raising money to participate in the auction, DoT officials said the main issue is to attract global telecom firms, who have expressed apprehensions about participating at this stage. ?We believe that India is all prepared for launching the 3G services but the timing should be congenial for the participants to raise money,? the official added.
There is a major issue, which need to be ironed out before conducting the auctions on which the finance ministry has raised objections. It is about charging the 3G players 1% of their incremental revenue as spectrum usage charge after the first year of operation, during which there would be a moratorium. The finance ministry feels this would prod players to conceal their 3G subscriber base. Also, doubts have been expressed whether the 2G and 3G revenue streams can be segregated. DoT has set up a committee with industry participation to find a way out.