It looks like the picture of 2008 mayhem is still afresh in the minds of bureaucratic leaders. Department of Telecom (DoT) has hinted that telco’s winning 3G licenses will need to submit license fees well within stipulated time of 20 days.
The new payment module will ask winning operators to pay 25% of the bidding amount within 5 days of auction and rest within 15 days. This is done to avoid any delay or default in spectrum payment to government as final bidding prices could touch astonishing level due to shortage of spectrum.
This decision of upfront license fees payment well before the spectrum allocation is majorly forced by finance ministry which is in urgent need of cash to lower the fiscal deficit pressure. 3G auction was to garner around Rs. 25,000 crores for government with base prices hovering at Rs. 3500 crores.
The auction is scheduled to take place in January – 2010 although it is rumored to be delayed again by one more month. The spectrum however will only be allocated to winners only by August 2010.
There will be a huge rush for 3G licenses as and when it opens for bidding. Many of the private telcos believe it will be a major driver for their future growth. 3G licenses will also put pressure on telco’s balance sheet as expenditure equaling billion dollar is significant from any extent. Thus government step to push for advance license fees will surely weed out unsound players.
