By R. Jai Krishna
NEW DELHI--India's federal cabinet Wednesday approved 37.05
billion rupees ($603 million) as the starting price for the sale of
frequencies to cellphone operators to offer third-generation, or
3G, communication services.
The price is for one set of bandwidth in the 2100 MHz frequency
category, meant for offering cellphone and Internet services.
The cabinet decision paves the way for the Department of
Telecommunications to go ahead with the much-awaited auction. Late
Tuesday, it postponed the auction to March 4, from the earlier date
of Feb. 25.
The auctions are crucial for the government to boost revenue and
contain its fiscal deficit within the targeted 4.1% of gross
domestic product in the year ending March.
Telecom operators are also awaiting the auctions to buy more
bandwidth, which would allow them to offer high-margin Internet and
multimedia capabilities on cellphones and tablet computers.
More bandwidth would also allow them to expand into new regions.
During the last auction in 2010, none of the operators were able to
buy bandwidth in all of India's 22 telecom service areas.
Shares of telecommunications companies ended lower Wednesday
after news of the postponement of the auction. Bharti Airtel
(532454.BY) fell 4.8%, Idea Cellular (532822.BY) declined 2.3%
while Reliance Communications (532712.BY) ended 2.9% lower.
The cabinet decision was announced after market hours.
Write to R. Jai Krishna at krishna.jai@wsj.com
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