India's 3G Spectrum Bidding hits Rs. 89.14 Billion

Bidding for the faster spectrum -3G in India is about to touch Rs. 90 billion (about $2 billion) while the starting price was Rs. 35 billion, reported Total Telecom. About 94 rounds of bidding have been completed and the amount has risen by 155 percent. The Department of Telecom said that the bidding for the only available pan-India slot will start at Rs. 89.42 billion when the auction resumes on April 29.

Nine local cellular phone operators who're bidding for the 3G Spectrum in India include Bharti Airtel Ltd., Reliance Communications Ltd., Vodafone Essar Ltd. and Idea Cellular Ltd. The government plans to collect about Rs. 4,500-5,000 crore by the end of this auction. But at this pace, it looks like the government may except to exceed the initial revenue amount when the auction actually ends. Communications Minister A. Raja, on April 26, said the government expects to raise Rs. 55,000 crore from the ongoing auctions of radio frequency spectrum for 3G telecom services and for rolling out broadband wireless Internet services in the country.

Successful bidders will be able to offer 3G services from September 1 commercially. The 3G spectrum auction may take about two-three weeks to complete.

Finally, after a long bumpy ride and several delays, the 3G spectrum bidding scene looks promising for privately held companies. However, a shocking report from The Pioneer came out yesterday and dropped a bomb exposing a controversial multi-crore 2G Spectrum scam. As per the report, CBI had tapped phones for evidence against Nira Radia, a PR honcho and stake holder in several consolutancy companies, who was regularly in touch with Telecom Minister A Raja. Radia's role as a powerbroker in 2G spectrum scam was clearly exposed in the documents with The Pioneer.

The report also stated that telephone lines of several other influential businessmen, politicians and advertising professionals have been tapped. The Nira Radia-A Raja phone tapping report had led to the adjournment of Parliament and Central Board of Direct Taxes also came out with a press release for damage control. The press release stated "the CBDT has clarified that the Income Tax Department has not recorded any telephone conversation of influential businessmen, politicians and advertising professionals as alleged".

We don't know if this controversy will affect the current 3G Spectrum auction directly or indirectly. But state-owned mobile operators MTNL and BSNL would certainly face troubled waters. Why? It's because the Indian government has already given both of them a head start in 3G Spectrum with a condition to pay the amount equivalent to highest bid in respective service areas. So if the 3G auction bidding amount goes higher than expected, both MTNL and BSNL will have to pay equivalent amounts.