Government hopes to raise Rs.35,000 crore from 3G auction

NEW DELHI - The government expects to raise as much as Rs.35,000 crore ($7.2 billion) from auction of third generation (3G) spectrum, Finance Minister Pranab Mukherjee said Monday while presenting the budget for 2009-10 in the Lok Sabha.

The estimated figure, included in the receipts from the “other communications services” category in the budget, is higher than what Communications and IT Minister A. Raja laid out last month.

Raja had said the government could raise Rs.25,000 crore from auction, down from the previous fiscal estimate of Rs.30,000 crore.

However, the figure was Rs.20,000 crore in the interim budget presented by Mukherjee last February.

“The budget estimates for 2009-10 include a sum of Rs.20,000 crore as the expected revenue from auction of 3G spectrum,” Mukherjee had noted, while presenting the interim budget.

Other major income sources for the Department of Telecommunications (DoT) are licence fee, entry fee, fee to offer V-Sat services, long-distance licence fee and mobile phone services.

The 3G auction would enable telecom operators to offer high-end services like high-speed Internet and video downloads on mobile phones.

The auction process has been delayed several times since January when it was first scheduled to happen.

Reacting to the finance minister’s announcement, global consultancy Goldman Sachs has requested the government to come up with more clarity on what it would do with the proceeds from 3G auction.

“We wait for more clarity on disinvestment and 3G auction proceeds,” it said in a statement Monday.

Added Romal Shetty, executive director (telecommunications) at auditing major KPMG: “Knowing the operators, they have been waiting for 3G for long now. It (the proceeds from auction) will go at a much higher price than we expected.”

“There will be little strain on the balance sheet of operators but it’s a strategic decision,” Shetty said.