NEW DELHI--India's federal cabinet on Monday approved the
starting prices for auctioning telecommunications bandwidth to
cellphone operators as it seeks to raise 648.40 billion rupees
($10.24 billion) through nontax routes to improve the country's
weak financial position.
The cabinet approved 36.46 billion rupees as the price for one
set of bandwidth in the 800 MHz frequency category, meant for
offering cellphone services using code division multiple access, or
CDMA, communications technology, according to a government
statement.
The cabinet also set the price for bandwidth in the 900 MHz and
1800 MHz categories at 39.80 billion rupees and 21.91 billion
rupees, respectively. These two frequencies are used by operators
to provide cellular services using the more popular global system
for mobile communications, or GSM, technology.
Frequencies in the 900 MHz bandwidth won't be sold in the Delhi,
Mumbai, Kolkata, Jammu and Kashmir service areas, while auctions
for the 1800 MHz frequencies won't be held for Maharashtra and West
Bengal, the government statement said. The government won't sell
frequencies these service areas as it doesn't have bandwidth to put
on auctions.
The government plans to carry out the auctions in February.
The money raised through the auctions is crucial for the
government to boost revenue and contain its fiscal deficit within a
targeted 4.1% of gross domestic product for the year through
March.
In the budget presented in July, the government projected
revenue of 454.71 billion rupees from the frequency auctions this
fiscal year. However, late Monday it raised its estimate to 648.40
billion rupees and said from that figure, the government will get
about 160 billion rupees during this fiscal year through end of
March. The figure doesn't include estimates for funds to be raised
selling frequencies for 3G services.
Telecom operators keenly await the auctions. For the country's
top four operators-- Bharti Airtel Ltd., the Indian unit of
Vodafone Group PLC, Idea Cellular Ltd. and Reliance Communications
Ltd.--the auctions are important in ensuring operations in some
parts of the country where their permits are close to
expiration.
Other operators such as Norway's Telenor ASA and Russia's
Sistema JSFC want more bandwidth to expand into new service
areas.
Fresh bandwidth would also allow companies to offer high-margin
Internet and multimedia capabilities on cellphones and tablet
computers.
Write to Rajesh Roy at rajesh.roy@wsj.com and R. Jai Krishna at
krishna.jai@wsj.com
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