FM-III e-auctions to kick off in November

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16 Feb 2012
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New Delhi: The 3G-style electronic auctions of 839 new FM stations in 294 cities under the FM-III policy will be conducted in three batches, starting with the first batch of 200-250 FM channels in 100-plus towns by November. The remaining two batches will be conducted next year.
The first batch of e-auctions will include the 132 vacant FM slots in existing 86 towns, 33 new slots in the border towns of Jammu & Kashmir and the North-Eastern states and another 100-odd slots in about 30 new towns so far untouched by the private FM radio companies allowed in the first and second phase of private FM policies announced in 2001 and 2005, respectively.

The FM-III policy, cleared by the Cabinet in July 2011, has made key changes over the previous two policies as it hiked the FDI cap to 26% from the earlier 20% and allowed ownership of multiple channels within a city, also not permitted so far. News and current affairs has also been allowed under FM-III policy, thereby making the FM radio sector an attractive financial proposition for those interested to expand their presence in more towns. Also, all auctions will be conducted via the 3G-style ascending e-auctions, much to the dislike of the radio companies.

The R1,000-crore private FM radio industry, managed between three-dozen companies, is waiting for the FM-III rollout to help improve the financial viability of the otherwise loss-making sector due to high operational cost and advertising revenue as its lone source of income.

“An auction roadmap and a time-table certainly helps all. To be conducted by the information and broadcasting (I&B) ministry, in close coordination with the telecom ministry, the first batch of e-auctions is expected to take place between October-December after the government zeroes in on the auctioneer by June,” Uday Kumar Varma, secretary, I&B ministry, told FE.

According to Varma, the work is on for the finalisation of RFP (request for proposal) for selection of agency for conducting these e-auctions. “An inter-ministerial committee has already deliberated on the draft RFP, which will further be finetuned to suite the demands of the industry,” Varma said.

I&B minister Ambika Soni has been instrumental in pushing the FM-III policy after taking over charge in June 2009 as the matter was pending since 2008.

The FM-III policy envisages the spread of private FM radio to 227 new cities, including those with population of even 1 lakh, Soni had said after the Cabinet nod last year.

The policy estimates a minimum of R1,532 crore in revenue generation, based on the already fixed minimum reserve price for each of the 294 towns. The government has already earned R1,750 crore in revenue from the 245 FM stations operational in 86 towns.

Experts said the FM-III rollout will help improve the financial viability of the loss-making sector due to high operational cost with only advertising revenue as its lone source of income.

“What makes FM-III

interesting for the operators is the flexibility to own more than one channel in a city, something not allowed currently. Also, instead of a 10-year licence period, FM-III offers a 15-year licence period, which helps the operators manage its financials and cash flow better,” Sunil Kumar of Big River Radio, an independent radio consultancy firm, recently told FE.

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