After earning millions of dollars selling frequency licenses, the government may provide incentives for 3G operators.

Communications and Information Minister Sofjan Djalil said Friday the government would consider giving additional frequency blocks to 3G operators without requiring an up-front fee.

He said the incentive would ease the burden on 3G operators in running their businesses.

"But this can only be done after the government finishes arranging the 3G frequency (at 1900 MHz) in 2008," he said.

PT Telkomsel, PT Excelcomindo Pratama and PT Indosat, the winners of the government's recent 3G tender, are now required to pay up-front fees amounting to twice their final bids and 20 percent of annual fees within 30 days. Each company will operate one 3G frequency block for 10 years after paying the fees.

Telkomsel bid Rp 218 billion (US$23.7 million) for its block, Excelcomindo Rp 188 billion and Indosat Rp 160 billion. The annual licensing fee for each operator will be set at the lowest bid of Rp 160 billion.

Sofjan said the government would receive from the tender winners a total of Rp 1.2 trillion (US$130.4 million) within a month and more than Rp 6 trillion over the next 10 years.

He said a similar incentive might also be given to two other 3G operators, PT Natrindo Telekomunikasi Selular and PT Cyber Access Communication, which obtained their licenses through a beauty contest in 2003.

"They can get the incentive if they join the frequency," he said

The two operators are still indecisive after the government obliged them to pay up-front and annual fees at the same rates as the company that submitted the lowest winning bid in the recent tender, Indosat.

Even though they have no up-front fee requirements on their current contracts with the government, the two companies will now have to pay double what Indosat pays, because they own two frequency blocks.

They have yet to pay anything to the government because they have yet to deliver 3G service.

"So far, the two companies have not expressed any objection to the licensing fees, but I have asked them to discuss their payment schemes next week," Sofjan said.