The government expects to collect 350 billion rupees ($7.2 billion) from an upcoming auction of third-generation (3G) radio spectrum, the annual budget showed on Monday, up 75 percent from an earlier target.

The auction, which would allow telecoms firms to offer services such as high-speed Internet and video downloads on mobile phones, is scheduled to happen by December. The government had initially aimed to get 200 billion rupees.

The sale has been delayed from this January after high prices fetched by private telecoms companies for selling stakes prompted a review of the floor price.

The finance ministry wanted the floor price doubled to 40.40 billion rupees, a figure that is yet to be cleared by a committee of ministers. The number of slots to be put on the block would also be reviewed.

There will be heavy demand for spectrum in larger services areas and bids could be sharply higher than the floor price, an analyst said.

"The price of 3G auction in metro cities and also in some of the A circles should be substantially higher than the reserve price," Mahesh Uppal, director at telecoms consulting firm Com First.

"Reserve price matters primarily when the competition is low," he said.

As per the initial guidelines issued last year, the government planned to conduct the auction for 20 of India's 22 telecoms zones and had said companies could bid for four slots in most of these areas.

Leave Your Comment(s)