Govt can raise Rs 85,850 cr by selling 50% of defence airwaves

The telecom department (DoT) believes that the exchequer can get a minimum of 85,850 crore by selling just 50% of the airwaves the defence ministry vacates.

Its calculations are based on the assumption that about 20 MHz of second generation (2G) and an equal amount of third generation (3G) can be sold to mobile phone companies if the defence ministry was to free up these radio frequencies, according to an internal DoT note reviewed by ET. In total, the telecom ministry is seeking that the armed forces vacate up to 80 MHz of airwaves for commercial telephony.

The broadband wireless spectrum auctions in India last year delivered the government an unexpected bonanza of 38,543 crore ($8.25 billion), twice the amount predicted by analysts. The 3G and broadband spectrums jointly fetched 1,06,000 crore for the government against its estimates of 35,000 crore.

The telecom department's projections are part of its response to the defence ministry's latest threat that it will not release additional airwaves for commercial use. It also marks the first time that the department has put a value to the airwaves it is seeking from the armed forces.

Defence Minister A K Antony had recently told Finance Minister Pranab Mukherjee that the telecom department had failed to meet all timelines on building an alternative communication network for the armed forces, and warned that it could result in the services stopping all vacation of airwaves.

This is because, as per the MoU between both ministries, the armed forces were to vacate 25 MHz for 3G and 20 MHz for 2G. This will happen in a phased manner and will be linked to the completion of the alternative network that the DoT is building for the defence forces. Besides, the telecom department was also slated to set up an exclusive defence band and defence interest zone for the armed forces to keep its part of the bargain.

While the armed forces have already freed up 15 MHz 3G spectrum, which was sold during last year's auctions, and also vacated 15 MHz 2G spectrum, which has been allocated to new operators, the remaining airwaves - 10 MHz spectrum in 3G (for two operators) and 5MHz in 2G - will be released only after the alternative optic fibre network being built by BSNL is completed.

Analysts say the telecom department may earn more than their estimates if 20 MHz each of 2G and 3G airwaves are auctioned.