Govt to rake in 3G windfall this fiscal

The exchequer will receive the entire budgeted Rs 35,000 crore from the auction of 3G spectrum this financial year, as the department of telecommunications (DoT) has decided to ask successful bidders to cough up the entire payment within a week of auctions, even though spectrum would be allocated only by August.

?The notice inviting applications, which will be released on January 10, will mention this change,? said a DoT official. The development assumes significance because successful bidders were supposed to deposit only 25% on completion of the auction and pay the rest when spectrum was allocated.

However, even though the government now plans to allocate spectrum simultaneously to all four successful bidders in August, by when the defence forces would vacate the necessary spectrum, it wants full payment upfront to meet its budgeted target.

However, successful bidders will now have to rework their calculations and scribble the full upfront payment into their current fiscal?s books. Each operator will pay roughly 7,000-8,000 crore for pan-India spectrum, according to industry estimates.

According to the revised schedule, auctions will begin from February 13. The government plans to hold auctions for four slots across the country for private players while one slot has already been allocated to BSNL/MTNL.

The 3G spectrum auction, which was earlier scheduled for January 14, has been delayed because the defence ministry did not vacate the necessary 25 MHz spectrum by December 3, 2009. As a consequence, DoT could not issue a notice inviting applications on December 8, 2009 as planned.

However, with the intervention of the empowered group of ministers headed by finance minister Pranab Mukherjee, the defence ministry has agreed to vacate spectrum. It has already vacated 10 MHz and another 5 MHz will be vacated by March. The remaining 5 MHz will become available by August.

The alternate optic fibre network for defence communication, which is to be built by DoT at a cost of around Rs 9,000 crore, has already been accorded Cabinet approval.