Skyrocketing 3G prices prompts further look at India’s 2G award process

With the provisional price for a pan-India 3G licence reaching INR 113 billion (US$2.52 billion) on day 23 of India’s 3G auction, questions are being asked over how the government previously awarded 2G licences at such low prices in 2001 on a ‘first come, first served’ basis, despite the telecoms regulator having recommended an auction process.

Last week opposition members called for the resignation of telecommunications minister A. Raja, suggesting corruption and partiality was involved in the licensing of 2G. According to reports, the Central Bureau of Investigation has been investigating for some months already several Department of Telecommunications (DoT) officials and private companies, over the way the licences were granted, with several winning bidders on-selling their licences to foreign firms with large profits.

The 3G auction began on April 9 and is expected to be tied up within a few days. The current provisional price for a nationwide licence of INR 113 billion is 3.2 times the reserve price of INR 35 billion.

The service circle of Mumbai continues to top the bidding with a current price of INR 19.867 billion, followed by Delhi with INR 19.2 billion. At the current prices across all circles, the government is guaranteed at least INR 456.9 billion in proceeds from the auction.