Barely hours after Infotel Broadband Services Ltd won the auction for India’s Wireless Broadband Access (BWA), Reliance Industries Ltd (RIL) made a surprising move by acquiring 95% stake in the company owned by the Nahata family. This will pit the Ambani brothers against each other in the telecom sector, which is permissible after the annulment of the non-compete agreement less than a month back.

Infotel Broadband is the successful bidder for all 22 circles at Rs 12,848 crore. The BWA spectrum auction held by Department of Telecommunications (DoT) raked in Rs 38,000 crore. Together with the 3G auction spoils of last month that earned Rs 67,720 crore, the government gets more leverage to bring down the ever-widening fiscal deficit gap.

In the BWA auction, Aircel successfully bid for eight circles for Rs 3,438 crore. Bharti Airtel and Qualcomm Inc managed to corner four circles each. Eleven companies participated in the BWA auction for two bandwidth slots in the 22 circles. The BWA spectrum will make it possible to use hi-speed technologies like Wimax that is faster and more traversable than WiFi.

The latest move by Mukesh Ambani of RIL will place him in direct competition in the telecom sector with his estranged brother Anil Ambani of RCom, the country’s second largest mobile service provider. However, RCom had earlier pulled out of the BWA auction after it succeeded in the 3G auction of last month.

This is homecoming for Mukesh Ambani in the telecom sector after he was forced to forgo the telecom business to his younger sibling in the division of Reliance group.

“We see this as the next wave of value creation opportunity in the wireless broadband space. We believe this will pole-vault India’s economy into the digital world at an accelerated pace,” said Mukesh Ambani.

Wireless broadband internet services market in the country is expected to grow 100-fold in the next five years.

The 16 day auction for the Broadband Wireless Access (BWA) spectrum is completed. The Indian government received more than Rs 38,000 crores during the BWA spectrum auctions.

The total receipts to the government from the combined sale of BWA and 3G spectrum crossed Rs 1.06 lakh crores. This is almost three times when compared to the projections of Rs 35,000 crore that Finance Minister, Mr. Pranab Mukherjee made during his budget speech this February. The Department of Telecom has not shared the details regarding the BWA spectrum auction winners yet, the same will be shared shortly.

3G spectrum auctions brought in Rs 67,719 crore for the government. Including 3G and BWA the government received almost thrice the estimated amount which amounted to an additional amount of Rs 70,000 crore received by the government during the auctions. This extra money will go a long way in helping the government bridge the gaps in the fiscal deficit for the ongoing financial year.

Similar to what happened during the 3G auctions, the circles of national capital Delhi and the business capital Mumbai got the highest bids which were Rs 2,221 crore and Rs 2,272 crore respectively.

Two all-India slots of 20 MHz spectrum were auctioned during the BWA spectrum auction. Government players MTNL and BSNL were provided with the BWA spectrum before the private players but they will have to pay the amount equal to the winning bid amount in each areas of service.

All leading telecom companies like Idea Cellular, Tata Communications Internet Services, Vodafone, Bharti Airtel, Aircel, and Reliance took part in the BWA spectrum auctions. There were almost 11 companies in the race.

Broadband Wireless Access spectrum can be used for high speed Internet and data services along with services like Voice, Internet Telephony and internet based Television services.

Pranab Mukherjee warned G20 member countries not to embark on a quick roll back of stimulus packages, as it might undermine the fragile economic recovery being witnessed globally. He was speaking on the concluding day of the G20 finance ministers’ meet in Busan, South Korea on Saturday.

“While we should not rush to fiscal exit at the same time so as not to undermine the recovery, especially since the monetary policy instrument is not very effective on account of continuing instability in financial markets, those countries that have market compulsions may need to start the consolidation now,” Mr. Mukherjee said.

Indian FM stressed the need to clearly lay down credible and transparent fiscal consolidation paths. According to him, countries should go in for gradual stimulus withdrawal without delay before they are forced to do so by the deterioration of market’s fiscal conditions.

“And, we need to act before the market forces us to do so. I may point out that fiscal deterioration is a natural corollary of deep and protracted recessions and downturns as governments try to stimulate the economy back to their true potential. This entails ceding some control to markets that have to fund the high deficits,” he elaborated.

While speaking at the meet, Mr. Mukherjee said that financial assistance to developing countries should not be halted in the name of fiscal deficit correction, even if it is important to the developed economies. He said, “We need investments in human resource development and infrastructure in developing countries so that they can become new nodes of sustainable high growth.”

The FM said that the world economies can avoid debt trap by growing and creating more jobs, which is not happening during the economic recovery process.

At the end of the meet, a G20 communiqué stated that the world economy is recovering faster than expected, but the volatility in financial markets signifies the challenges ahead. The meet also dumped the introduction of global bank tax levy due to opposition from Brazil, Canada and Japan. India too was not in favor of the tax.

In a move with far-reaching implications, the government declared it essential for listed firms, both public and private, to have 25% public shareholding. This act is expected to result in a glut of public issues in the already overladen market. The government decision is to bring in more accountability and to enhance investor participation.

The Securities Contracts (Regulation) Rules was amended on Friday to the effect that listed companies with less than 25% public holding will increase their public holding by 5% a year until the stipulated level is reached. The government sees the amendment as a new source of revenue and a way to reduce fiscal deficit. However, there is fear that the step will add pressure on share prices and enhance liquidity.

The direct outcome of the decision would be raising of a huge amount of money to the tunes of Rs. 1.5 lakh crore from the market, out of which almost 80% by the 29 listed public firms.

The Finance Ministry has set the 5% minimum limit for the annual increase, though companies may be allowed to float more than 5% shares. The latest amendment allows companies five years time limit to comply with the decision.

Market analysts welcomed the new rule saying that it will add depth and liquidity in the market. The timeframe of five years will ensure that the market is not flooded with public offerings at the same time. However, they agreed that the situation will pose a challenge to merchant bankers to bring forth innovative solutions to catch the attention of investors.

Meanwhile, the Federation of Indian Chambers of Commerce and Industry (FICCI) has made known its displeasure at the decision citing dilution of promoter’s stake to 75% or below.