India Sets Prices for 3G Frequency Auctions

   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 [e-mail]

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