India - 3G

3G auctions postponed to Jan 30; bidders await clarity on charges

The department of telecommunications (DoT) has put off the 3G auctions by a fortnight, thanks to the poor response of foreign operators and uncertainty over the 2% administrative charge on bidders, on which the Cabinet Committee of Economic Affairs (CCEA) has to take a decision. The auction, earlier scheduled for January 16, may now take place on January 30. A DoT official told FE that the auction had been postponed on the request of prospective bidders for more time. Fe was the first to report in its October 27 edition that the auctions would be postponed as international telecom companies would find it hard to raise funds amid the financial crisis. A source told FE that the auctions could be postponed beyond January because, in all likelihood, the CCEA would constitute a sub-committee to examine the issue of 2% administrative charges on the highest bid amount on a recurring basis. The same was proposed by the Telecom Regulatory Authority of India (Trai) but was rejected by the Telecom Commission, the apex policy-making body of DoT. A cautious communications and IT minister A Raja, however, wants CCEA to vet the proposal this time, as he has been under fire for tweaking Trai proposals. However, officials said CCEA would not like to hurry through the proposal since the Trai has done an elaborate exercise and specifically cautioned that the recommendation should be accepted in its entirety, and not cherry-picked. In all probability, CCEA might reduce the charge from 2% to 1% rather than scrapping it altogether , an official said. The pre-bid conference, held on December 23, was skipped by almost all major international players, since it is pointless to join the bids till all contours of the policy are in place. The other uncertainty that has made 3G auctions unattractive for new, foreign players is the government s flip-flop over 2G spectrum allocation to them. The earlier official stand was that 2G spectrum could not be guaranteed for all players, though they would be free to offer all forms of service. But as a last-ditch attempt to sweeten the offer, on December 23, member, finance of the Telecom Commission, announced that all players would be granted 2G spectrum once the needs of the incumbents are met. In this scenario, new players would rather wait than take the plunge. The government had initially estimated to garner around Rs 40,000 crore from 3G auctions, which would have helped it to bridge the fiscal deficit. However, after the global meltdown, the estimate was lowered to around Rs 30,000 crore.