Stick to December deadline, we need the revenues, FM says in letter
With an estimated Rs 30,000 crore of revenue at stake to bridge a yawning fiscal deficit, Finance Minister Pranab Mukherjee has categorically told Communications Minister A Raja that auctions for licences for third-generation or 3G telecom services cannot spill over to the next calendar year under any circumstances.
In a strongly worded letter to Raja on October 15, Mukherjee urged him to “quickly resolve all outstanding issues” and ensure that the 3G auction process is held on schedule in December this year.
Any delay in conducting the 3G auction, particularly after the ground rules have been decided by an Empowered Group of Ministers (which Mukherjee chaired), would prejudice national interest and send mixed signals to potential investors, the finance minister’s letter said.
Mukherjee’s letter follows a move by the Department of Telecommunications (DoT) last month to delay 3G auctions to June next year because the defence services were unlikely to vacate the spectrum bands it had promised by then. As a result, DoT did not release an information memorandum setting out rules for the auction on the scheduled date of September 29.
In response to the letter Raja is believed to have asked Mukherjee to intervene and consider holding a meeting with Defence Minister A K Antony to resolve outstanding issues on spectrum so that auctions can be held on time.
Under an agreement with DoT, the defence services were to have handed over 20 MHz of 3G spectrum, the radio frequencies that enable wireless communication, by December.
The defence services said they would delay releasing spectrum because they want to first test the alternative backbone that state-owned Bharat Sanchar Nigam is building for them.
In India, telecom licences come bundled with spectrum. The minister’s group had approved guidelines for 3G auctioning on August 30 under which five blocks with spectrum of 5 Mhz each would be auctioned across the country.
Some industry CEOs have suggested that 3G auctions have been delayed at the behest of some telecom companies that did not want to put in the cash required to bid for a 3G licence at a time when they are expanding capacities. Incumbents like Bharti Airtel and Tata Teleservices have, however, supported a quick auction.
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