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More FM Channels soon: Govt invites bids for second batch of Phase III FM Auctions

Radio

The Ministry of Information & Broadcasting (MIB) has invited (pdf) applications for auction of the second batch of Phase III FM Radio channels, which comprises of 266 private FM radio channels across 92 cities. The second batch of auctions will consist of 227 channels in 69 new cities, and the remaining 39 FM channels in 23 existing cities. List of cities here.

Note that the first batch of Phase III FM auctions was conducted in April last year after the ministry invited bids for 135 FM radio channels across 69 cities in March 2015. The ministry had received 28 applications for auction under first batch of Phase III FM Radio channels at that time; applicants included Dainik Bhaskar Group, Reliance, Radio Mirchi, among others.

e-auction: Bidders can place bids online using Electronic Auction System (EAS). For this, bidders will have to mandatorily procure Class-III Digital Signature Certificate(s) (DSC) issued by any valid Certifying Authority (approved by Controller of Certifying Authorities) in India.

Tentative timeline:

 tenative-timeline-fm-auctions

Auction process will be carried out in four stages:

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

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 September 1, 2016, or until prospective bidders complete the below mentioned formalities, as per the tentative timeline released by the Ministry.

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

– 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.

– 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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Foreign Investment

– The total direct and indirect foreign investment in a bidder’s company shall not exceed 26% at the time of application and during the validity of license as well. The company will be required to disclose the status of each foreign holding and certify that the foreign investment is within the 26% on a yearly basis. Approval of Foreign Investment Promotion Board (FIPB) shall be required for any existing or proposed foreign investment in the company.

– If government policy on Foreign investment is modified during the license validity period, companies should conform to the revised guidelines within a period of six months from the date of notification. If the company fails to do so, it shall be treated as non-compliance to license agreements, and liable for punitive action.

Also Read: The Lowdown: India’s Phase III FM auctions

Image source: Flickr user Marite Toledo under CC BY-NC-ND 2.0

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