Small towns become battle grounds for national FM radio

As many as 13 key vacant private FM radio stations in five towns are likely to become the battle ground for six big national private FM radio companies in the next month's financial bidding of 96 vacant stations across 48 cities.

These 13 vacant stations (or frequencies) are spread between Dehradun, Patna, Cuttack, Jhansi and Mysore and are expected to attract over Rs 60 crore in licence fees (over Rs 4 crore per station) from the leading FM radio companies including Big FM, Radio Mirchi, Radio City, Red FM, South Asia FM, sources said.

These stations remained vacant after the last years bidding of 337 FM stations of which licences were awarded for 266 stations.

The ministry of information and broadcasting (I&B) has already generated Rs 1,537 crore in revenue by awarding 266 stations to over 30 companies (about Rs 5.7 crore per station).

Other smaller cities like Akola, Bilaspur, Agartala, Imphal, among others, that also have vacant FM radio stations, may not see any large FM radio company bid, sources added.

Overall, 96 remaining vacant stations in 48 cities will be opened for financial bidding next month, the tenders for which have already been submitted by most current FM radio operators.

Currently, of the total of 266 station licences issued, about 80 FM stations are already operational, while another 186 will be operational by the end of next year.

According to industry estimates, these five cities alone will be able to generate about 30 per cent of the total licence fee expected to be raised from the 96 frequencies that remained vacant after the second phase bidding held in February 2006.

"We see Dehradun and Cuttack as a big market for FM radio and every radio company is expected to bid," says a senior executive in Radio Mirchi that has licence to operate FM stations in over 30 towns.

A source in Big 92.7 FM confirms that the company would be looking at increasing its existing tally of 45 stations by adding at least 8-10 more stations in next months bidding.

The main driver for the private sector investments in the FM radio sector was the policy shift in FM radio regulations "� from the licence fee regime (adopted in the first phase in 2000-01) to the revenue-sharing model.

According to the new rules, radio companies have to share four per cent of their annual revenues with the government, while they get to operate FM station for a ten-year period by paying a one time entry fee.

"A radio licence in towns like Patna and Dehradun will be crucial for the leading FM companies gain a national footprint. FM radio companies will be able to recover their licence fee investments within 3-5 years in these cities," a FM radio observer said.