Connection test

New Delhi, Jan. 11: The government wants the winners of third generation spectrum to pay the entire bid amount upfront, irrespective of the number of slots being put up for sale.

Finance ministry officials told The Telegraph there was no scope of part payment as the government had already budgeted Rs 35,000 crore as receipts from the 3G auction for this fiscal.

Earlier, telecom minister A. Raja had said that telecom firms would have to pay only a quarter of the bid amount this fiscal and the rest when the spectrum was allotted in August.

“Even if two slots are put on sale, the government will be able to garner its estimated revenue (and maybe more) from the auction as intense competition will lead to higher bidding,” said the official.

With the department of telecom placing a ban on the allocation of second generation (2G) spectrum — which is used by all telecom firms to offer mobile services — operators will bid aggressively for 3G spectrum, industry experts said.

At present, operators use 2G spectrum to offer voice services, which account for more than 85 per cent of a telecom firm’s revenues. With no new 2G spectrum allotments, service providers would want to use the highly efficient 3G spectrum to provide improved voice calls to its customers, leading to higher bids.

The base price has been set at Rs 3,500 crore for pan-India 3G spectrum. Commercial launch of 3G services is expected by September.

According to officials, “Winning bidders will deposit 25 per cent of the bid amount within five days from the date of auction and the remaining 75 per cent within 15 days of completion of spectrum sale.” However, the entire payment would have to be made in this fiscal.

Finance ministry officials said that a meeting of the nine-member empowered group of ministers (eGoM), headed by finance minister Pranab Mukherjee, is scheduled to take place in the next two days to take a final call on the bid terms.

The department of telecom will issue a notice inviting applications following the eGoM decision.

DoT officials said three slots in each of the 22 telecom circles in the country (including one reserved for state-owned BSNL and MTNL), would be put up for sale.

The final date of applications will be known by January 25, while the pre-qualification of bidders will take place on February 5. Mock auction will start on February 9 and 10.