India's 3G Spectrum Auction on Schedule

The auction of 3G spectrum and operating licenses in India will be held as planned on Jan. 14, the country's Minister of Communications and IT, A. Raja told reporters in Delhi on Monday, according to media reports.

The spectrum will be allocated to the winning bidders by August of next year, the minister said.

The communications ministry did not issue a notice inviting applications for the bid, as scheduled on Dec. 8, which led to speculation that the auction may be postponed again. The final date for applications was Dec. 21, according to a tentative schedule released by the Department of Telecommunications (DOT) in October.

The auction was originally fixed for January 2009, but was delayed as the country's finance and communications ministries could not agree on a minimum price for the licenses.

There was also reports that the country's defense ministry was reluctant to release spectrum to the communications ministry. As a result, the number of slots available for the bid in each telecom service area would be reduced, according to these sources.

Raja said on Monday that the number of slots would be four as originally planned. The fifth slots have already been allotted ahead of the auction to two government-run companies, Bharat Sanchar Nigam and Mahanagar Telephone Nigam, which who are already offering 3G services in some parts of the country.

The auction of 3G spectrum is to be followed two days later by an auction of licenses for operating broadband wireless services like Wimax, according to the schedule announced by the DOT. The government is also scheduled to auction on that day spectrum for enhanced CDMA (code division multiple access) services to existing CDMA licensees.

The government's decision to auction 3G spectrum came after its procedure for allocating spectrum for 2G services on a "first come, first serve" basis drew criticism from the Telecom Regulatory Authority of India (TRAI). The Central Bureau of Investigation (CBI), the country's top investigating agency is currently investigating alleged irregularities by the DOT in the award of 2G licenses.

The 3G auction, which is proposed to be an electronic auction over the Internet, will allow foreign bidders. If they win, foreign bidders will however be restricted to owning a maximum of 74 percent of equity in the company offering services.

Investors will have to bid separately for each of the country's 22 service areas.

The Indian government expects to raise at least 250 billion Indian rupees (US$5.3 billion) from the auction of 3G and other spectrum.

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