India doubles price of 3G spectrum

India’s finance ministry has proposed to double the reserve prices for the country’s highly anticipated 3G auction, while the telecoms regulator has pushed back the start of the process until January 30. The auction had originally been set for January 16, with the base price for nationwide 3G spectrum set at INR20.2 billion (US$412 million).

It is understood the cabinet is reviewing the finance ministry’s proposal, with a decision to be made next week.

However, analysts suggest that if prices are raised, this could add further delays to the process, as well as narrow the pool of bidders who would participate.

The telecoms ministry anticipates receiving up to INR400 billion for the sale of the combined 3G licences, with the auction for WiMAX licences scheduled to commence two days after.

In most of the country’s 22 telecoms circles, four paired blocks of spectrum will be auctioned; however, in the Rajasthan and North East circles, 3G spectrum is not available at all.

Reserve prices for metro and category A circles had been set at INR1.6 billion category B circle at INR800 million; and category C at INR300 million.

Foreign bidders are eligible to participate in the online auction for the 15-year licences, but must have a local partner and can not hold more than a 74 per cent stake in the joint venture. If the foreign partner owns more than 49 per cent, the venture will also require clearance from the country’s Foreign Investment Promotion Board (FIPB).

Bidders must already hold a unified access service license (UASL) or cellular licence, or have experience in providing 3G services with the intention to acquire a UASL licence before commencing operations.