The 3G bidding process going on in India these days is picking up heat and the day two of Indian 3G auctions has ended with bids surpassing more than $900 million, according to the Department of Telecommunications (DoT).
According to Business Standard
“Bids rose on the second day of India’s multi-billion dollar third-generation (3G) auction, with one provisional winning bid for national cover touching Rs 4,085 crore ($922 million), or about a 17 per cent premium to the base price, government data showed.”
Four bidders are competing for three spectrum lots in Delhi. The metro received the highest bid amount of 3.92 billion rupees followed by Maharashtra, Andhra Pradesh and Tamil Nadu, which all ended on bid amounts 3.81 billion rupees on Saturday.
The reserve price for Delhi service was 3.2 billion rupees. India’s biggest cellcos – Bharti Airtel, Reliance Communications, Vodafone Essar, Tata Teleservices, Idea Cellular and Aircel – are aiming for a pan-Indian 3G footprint. Smaller GSM1800 players – Videocon, S Tel and Etisalat – are seeking 3G spectrum in selective circles only.
Pyramid Research has estimated nationwide spectrum could cost a winning bidder up to $2.3 billion. The 3G auction started on Friday, and is expected to heat up as bidding continues over the next eight to 12 days. No bids have yet been received for Orissa, Assam and Jammu & Kashmir circles. Only one bid has been lodged for the Himachal Pradesh, North East, Haryana and Punjab circles.
The auction is one of the major 3G auction in the South Asia region and will prove a catalyst. Neighboring countries like Pakistan, China, Sri Lanka and Bangladesh will soon follow suit.
The Economic down time and the ever increasing greed of government to mint loads of cash from the telecom industry has taken its toll on the upcoming Indian 3G License auction. A total of nine companies registered their interest in bidding for Indian 3G spectrum ahead of the deadline last Friday, though foreign players were notable by their absence.
According to a report in India’s Business Standard newspaper, existing operators Bharti Airtel, Vodafone Essar, Aircel, Reliance Communications, Tata Teleservices, Idea Cellular, STel, Etisalat and Videocon all submitted applications ahead of the 19 March deadline. Bharti, Reliance, Vodafone and Idea were also among the 11 companies which filed separate applications for the so-called Broadband Wireless Access (BWA) spectrum, which is being auctioned off alongside the 3G bandwidth. Several foreign players – including US-based AT&T and Verizon, and Australia’s Telstra – had been tipped to enter the fray but experts say that the high-cost of participation may have put them off. “There was an incremental burden on the new foreign entrants – of acquiring a unified access service license (UASL) for INR1,650 crore, apart from bidding in the 3G auction,” said Prashant Singhal, a telecom analyst at Ernst & Young. “[This] would have increased the cost substantially.” Other analysts suggest that some foreign players may be looking to partner with the new 3G licensees at a later date. However, we believe that it was the high cost of the 3G license and the limited number of slots that were made available that has negatively affected the investment scenario for any foreign operator.
India’s Department of Telecommunications has said that it will auction three slots of 3G spectrum in 17 telecom service areas – and four in the remaining five zones – when the auctions begin on 9 April. India hopes to raise INR350 billion (US$7.6 billion) from the auctions and has fixed a base price of INR35 billion (US$760 million) for nationwide spectrum. However, analysts predict that high demand for spectrum could see firms required to spend between US$1 billion and US$1.5 billion to secure a nationwide 3G footprint. Some smaller players – notably Telenor’s Uninor – have already ruled themselves out of the auction process.
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