NEW DELHI: The second phase of FM radio is all set to roll in India with the government today issuing the tender notice on the website of the information and broadcasting ministry (www.mib.nic.in).

Bids are being invited for the second phase in 91 cities having a population of more than 300,000, information and broadcasting minister Jaipal Reddy said here today.

Interacting with journalists here, Reddy said that the second phase of FM radio has the scope for approximately 338 stations to go on air as there are as many frequencies being put on offer.

The controversy-ridden first phase, which was flagged off in 2000, covered cities with population of 500,000 and more.

An I&B ministry official added, “We would have issued the tender document earlier, but some legal points, which needed to be properly phrased, took time to be cleared by the law ministry.”

With 20 per cent foreign investment allowed in FM radio ventures, the government expects more players would join the fray, while the existing ones would bid for additional stations.

The government had earned a sum of Rs 370 million by auctioning off FM frequencies to over 25 private companies during the first phase as advance fee.

Subsequently, quite a few of the companies dropped out even before the radio stations could go live, citing discrepancies in the tender document and final licence agreement.

“That’s why in the second phase, we have tried to plug loopholes and remove the drawbacks after getting extensive feedback from the industry,” the ministry official explained.

In the tender document, the government has stated applicant and its related entities “shall be allowed to bid for only one channel per city, provided that the total number of channels allocated to an applicant and its related entities not exceed the overall limit of 15 per cent of the total channels allocated in India.”

In respect to existing license holders, the license(s) held by them under Phase-I shall be taken into consideration for calculating the 15 per cent limit.

The second phase applicants will be eligible to participate in bidding in all the four regions after their financial eligibility has been assessed before the bids are finally opened.

Every applicant has to have a minimum net worth (calculated as sum of paid up equity and free reserves minus accumulated losses, if any) as per the classification of the city.

For `D’ category cities, bidders net worth will have to be Rs. 5 million, `C’ category Rs. 10 million, `B’ category, Rs. 20 million and for `A’ and `A+’ cities (the latter being the metros) Rs. 30 million. If a company is bidding for all the cities being put on offer, then the minimum net worth has to be Rs. 100 million.

The last date for submitting bids for the pre-qualifying round is 7 November 2005.

This time round some new entrants like Rajiv Chandrashekhar, former head of BPL Telecom and Hindustan Times-Virgin Radio (owned by flamboyant entrepreneur Richard Branson) combine are expected to enter the fray.