The government is understood to have decided to allow four private players in the 3G telephony space in five circles, while restricting competition to three private operators in the rest of the country for want of spectrum.

According to sources close to the development, Finance Minister Pranab Mukherjee has asked Telecom Minister A. Raja to go ahead with the auction of third generation spectrum (air- waves to transmit voice and data) without further delay.

Mukherjee, who is heading an Empowered Group of Ministers (EGoM) on 3G, is understood to have discussed the matter with Prime Minister Manmohan Singh to take a final decision on the number of players to be allowed to offer 3G mobile telephony.

The government expects to earn Rs. 35,000 crore from sale of spectrum in the current financial year and the EGoM had earlier decided to auction four blocks of spectrum throughout the country but the Department of Telecom (DoT) could not take a decision due to persistent differences with the Defence Ministry, which controls bulk of the spectrum.

The DoT is likely to come out with Notice Inviting Applications (NIA) from the potential bidders this week and may start the auction process by the middle of next month.

The Defence Ministry has already vacated 10 MHz of 3G spectrum and has agreed to release another five MHz by middle of this year and the spectrum would be allotted to all the winners simultaneously in August/September this year.

The government has said that 100 per cent of payment would have to be made within March this year. Earlier during the day, Raja said, “The government is very keen to complete the 3G auction process well within the financial year (March 31, 2010) and most likely will issue NIA this week.”

As per the original revised schedule, the auction for four slots of spectrum was to take place on January 14, but differences with the Finance Ministry over payment schedule and the Defence Ministry over spectrum release have delayed the process.

The government has fixed Rs. 3,500 crore as reserve price for the 3G spectrum for pan-India operations and Rs. 1,750 crore for Wireless Broadband services, known as Wimax.

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