June 5, 2012 / 3:21 PM / 6 years ago

UPDATE 1-India to allow more airwave slots in auction-official

(Adds details, background)

NEW DELHI, June 5 (Reuters) - An Indian ministerial panel decided to auction a higher number of slots in an upcoming sale of second generation (2G) radio airwaves than that proposed by the sector regulator, a government official said, although no decision was made on the base price for the auction.

The panel decided that more than 10 mega hertz (MHz) of airwaves should be auctioned in each telecom zone, said the official on Tuesday who declined to be named, higher than 5 MHz suggested by the sector regulator.

India will sell 2G airwaves for the first time through an auction, due by end-August, following a Supreme Court order to revoke all permits awarded to carriers in a scandal-tainted 2008 state grant process.

The auction base price proposed by the regulator was nearly 10 times what companies had paid in 2008, drawing protests from the telecoms industry.

The auction is the last chance for international carriers like Telenor and Sistema, as well as Indian firm Idea Cellular to win back their permits that are set to be revoked after the court order.

The Supreme Court’s order affects a total 122 zonal permits held by eight carriers, although not all of them are expected to bid in the auction.

A higher number of slots will allow at least two of the affected carriers to win back spectrum, the official said.

The panel of ministers has the final say on pricing and other rules.

Established carriers like Bharti Airtel and Vodafone’s local unit are not affected by the court order but are looking to buy more radio spectrum to feed their overstretched networks.

Revenue from the airwaves auction is crucial for the government that has budgeted about $7 billion from telecoms spectrum auction during the current fiscal year to March 2013 to help plug its widening fiscal deficit.

But at the same time, a high auction payment would further strain companies’ financials already hurt by fierce competition in the world’s second biggest mobile phone market after China.

Telenor and Sistema had said they would pull out of India if the regulators’ proposals were accepted. (Reporting by Devidutta Tripathy; Writing by Aradhana Aravindan; Editing by Jon Loades-Carter)

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