Govt's 3G auction target may be too conservative

The government expects to raise Rs 35,000 crore from the auction of 3G spectrum this year - a 75% increase over its expectations last year. But is this a conservative target? CNBC-TV18's Kenan Machado reports that the government could easily surpass its own target, even if it is set low.

 Here is a verbatim transcript of Kenan Machado's comments on CNBC-TV18. Also watch the accompanying video.

India's much awaited 3G spectrum auction is expected to raise as much as Rs 35000 crore - but that is the government's expectation. Even at a conservative estimate, it expects to raise Rs 28,000 crore from the auctions. A figure confirmed to CNBC-TV18 on Monday

Ashok Chawla, Finance Secretary said, "I can't really put a fix on the number but our estimate is that it will be in that region"

Using the Department of Telecom's earlier public statement on the 3G auction and adding to it extra blocks possibly available in Rajasthan due to vacationing of spectrum by the defense forces, CNBC- TV18's analysis shows some 36 blocks in Category A will be available for auctions. The reserve price for each of these blocks is expected at Rs 320 crore. The government could mop up Rs 11520 crore here.

Again, some 41 blocks are available for auction in Category B. The minimum revenue generated here could be Rs 6560 crore. Category C circles which have 25 blocks up for grabs, that could attract a minimum of about Rs 1500 crore. The final tally from 3G auction would be Rs 19580 crore.

The auction of Broadband Wireless Access or BWA slots too could generate atleast 8080 crore rupees. So the government could raise 27660 crore rupees from the auction of 3G and BWA spectrum.

Add to that an entry fee of 1658 crore rupees for a UAS licence fee and that some 6 operators could go for it, we can expect the government to raise some 9948 crore rupees. These calculations alone show that at a conservative estimate the government could raise over Rs 37,000 crore.

Even if we assume that all Category C circles in the 3G and BWA auction go unsold the loss to the government will be only 2220 crore rupees with the final figure to be over Rs 35000 crore.

That would mean that the government could easily surpass its own target, even if it is set low.