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Bids invited for first batch of Phase III FM auctions

The Ministry of Information & Broadcasting (MIB) has invited (pdf) applications for the e-auction of the first batch of Phase III FM Radio channels. This first batch of Phase III auctions comprises of 135 FM radio channels across 69 cities.

Tentative timeline:

Auction Timeline

Bidders will have to procure Class-III Digital Signature Certificate(s) (DSC) for signing and encryption issued by any valid Certifying Authority (approved by Controller of Certifying Authorities) in India, which is mandatory for accessing the platform the auction will be carried out on, Electronic Auction System (EAS).

The entire auction process will carried out in four stages:

Stage I: Invitation stage wherein prospective bidders submit their applications.

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Stage II: Screening of applications, publication of ownership details and pre-qualification test.

Stage III: Actual bidding for specific channels in different cities. This will be further broken into two stages – Channel allocation stage and Frequency allocation stage. In the first stage winning bidders FM channels in each city will be determined, while in the second stage specific frequencies for each channel will be identified. More on this here.

Stage IV: This is the grant stage wherein payment of winning bid amount is made and Letter of Intent (LOI) subject to fulfillment of relevant conditions is issued.

Pre-qualification process

This is expected to be completed by April 17, 2015, as per the tentative timeline released by the Ministry.

– Applicants need to pay application fee (Rs 25,000), provide provision of information, the required certification & undertakings and pay the Earnest Money Deposit (EMD).

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– Bidders for a channel shall be required to deposit EMD, along with the application for pre-qualification, in the form of a Bank Guarantee from a Scheduled Bank which shall be 25% of the reserve price of that city per channel.

– Applicants should deposit earnest money based on the number of channels in A+, A, B, C, and D cities that they would like to participate in the auctions. Bidders should note that at no stage in the auctions will they be allowed to bid for more cities than the Initial Eligibility Points corresponding to the EMD will permit.

– A consolidated EMD for all the interested cities/channels needs to be submitted along with the application. The total amount may be broken down into up to 5 different EMD letters.

– The EMD will be returned following failure to pre-qualify, or following the end of the auctions and after meeting all the necessary obligations under the Auction Rules.

Restriction on multiple permissions in a city: Every applicant will be allowed to run not more than 40% of the total channels in a city subject to a minimum of three different operators in the city.

Total number of frequencies that any individual company may hold: No individual company can hold permission for more than 15% of all channels allotted in the country, excluding channels located in Jammu and Kashmir, North Eastern States and island territories (only the earlier city specific restriction will apply to these states & territories).

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Total number of channels for allocation:

No of Channels - FM Auctions

Foreign Investment

– The total direct and indirect foreign investment including portfolio and foreign direct investments into the company shall not exceed 26% at the time of application and during the currency of license. The methodology of calculation of the direct and indirect foreign investments would be as per the extant policy of the Government. The company will be required to disclose the status of such foreign holding and certify that the foreign investment is within the ceiling of 26% on an yearly basis. Approval of Foreign Investment Promotion Board (FIPB) shall be required for any existing or proposed foreign investment in the company.

– If during the currency of the permission period, government policy on FDI/FII is modified, the permission holders shall be obliged to conform to the revised guidelines within a period of six months from the date of such notification, failing which it shall be treated as noncompliant of Grant of Permission Agreement, and liable for punitive action.

Also Read:

The Lowdown: India’s Phase III FM auctions

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TV Today Network to sell seven stations of Oye FM 104.8 to ENIL

Jagran Prakashan to acquire Radio City 91.1 FM

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