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The auction for 3G spectrum is set to take place from Friday for which nine mobile operators, including the big six, would bid for the 3-4 slots on offer.
The government is hoping to garner around Rs 30,000-35,000 crore (Rs 300-350 billion) by selling 3G airwaves and broadband wireless access spectrum through auction that is expected to last up to three weeks. There is, however, no time limit or deadline for the closing of the auction.
When asked if the auction could mop up the desired amount, Telecom Minister A Raja said, "I cannot anticipate or foresee all these things.. what is wrong if the government expects even Rs 60,000 crore (Rs 600 billion). Aspiration of the government is something different... what is going to come we cannot say."
The government has set base prices for all the 22 zones at Rs 3,500 crore (Rs 35 billion) and Rs 1,750 crore (Rs 17.5 billion) for BWA.
The e-auction will start at 9 a.m. on April 9 and will remain open till 7.30 p.m. everyday till the closure.
The final bidders include Bharti Airtel, Reliance Telecom, Idea Cellular, Vodafone Essar, TTSL and Aircel.
The winners will be awarded spectrum only in September, which means commercial operations of 3G services should be possible only in early 2011. With 3G services, subscribers will be able to download hi-speed data and video streaming.
The Department of Telecom has said the 3G auction is designed to prevent predatory bids. As per the auction rules, bidders cannot name their price. They can accept or reject the price posted in each round. There will be multiple, round-the-clock auction simultaneously for 22 circles.
The bidders will have no control on increasing the base price which can increase from 10 per cent to 1 per cent after each round.
If the number of bidders is one more than the number of spectrum slots, the increase would be 5 per cent. If there are two bidders more than the available slots, it would be raised by 10 per cent.
However, if the number of bidders is the same as the number of slots, the price would go up by only 1 per cent, as per the auction rules.
The bidding is expected to be aggressive but there cannot be any unrealistic bids, according to NM Rothschild and DotEcon, the designers of the e-auction system. The platform would not allow 'predatory' jump while bidding and ensure a market-driven price for the spectrum.
The winners are be decided through several rounds, where the base price would be increased according to the available slots in a particular circle.
According to Sanjay Bhandarkar, NM Rothschild (India) head, the bidding process would stop only when the highest bids have been detected. The auction for the BWA spectrum would be conducted two days after close of the 3G auction.
Three 3G slots have been put up for auction In 17 circles, while in the remaining five circles, four slots will be auctioned. For BWA, two slots are available for auction.
China, the world's biggest telecoms market, awarded 3G licences to the country's top-three phone operators in 2009.