India's government announced plans on Thursday to auction more than 800 FM radio licences, enabling listeners in many cities to tune into private radio stations for the first time. The auction of 839 licences marks an ambitious expansion of the sector and is expected to raise nearly $400 million in revenue, Information and Broadcasting Minister Ambika Soni told a news conference.
The third phase of the government's expansion policy "extends FM radio services to about 227 new cities," covering all Indian communities with a population over 100,000, Soni said. Only 86 Indian cities currently have private FM radio services. The main radio broadcast provider is state-run All India Radio.
Soni also announced that the foreign investment limit in the FM radio station operators would rise to 26 percent from the current 20 percent. In a further relaxation of tight broadcasting rules Soni told reporters that FM radio licences would be extended to 15 from 10 years and content rules would be eased to allow the stations to carry newscasts. Currently, FM stations cannot air news bulletins but under the new rules they will be able to carry news from All India Radio.
The sale will be conducted through an online auction which allows for fast bidding and is regarded by experts as a transparent sales method. The Congress government, which has been convulsed by a series of graft scandals, is keen to avoid a repeat of a 2008 scam under which mobile phone licences were allegedly sold at cut-rate prices, costing the treasury up to $40 billion.
Industry officials have said they expect bidding for the FM licences to be subdued as many radio stations which depend on advertising revenue for their earnings are posting losses. That would be in contrast to the fierce bidding war last year in the government's auction for third-generation (3G) mobile phone licences which raised some $15 billion for the government, twice the sum it expected.