It took a total 34 days for the Indian Government to raise $15 billion from the
3G spectrum auction. The amount is too high as compared to what the Indian government initially expected.
The government raised approx twice the amount i.e 677.1 billion rupees ($14.7 billion) from the 2100MHz auction alone when compared with the 350 billion rupees it forecast from both the country’s 3G and Broadband Wireless Access spectrum auctions (the latter is due begin on Friday).
Bharti Airtel emerged as the biggest contributor to the 3G spectrum auction as it picked spectrum in 13 circles including Mumbai and Delhi with a whooping amount of 122.95 billion rupees. Vodafone was next, winning spectrum in nine circles for 116.18 billion rupees, followed by Reliance Communications which successfully bid 85.85 billion rupees for 13 regions.
Aircel will pay about 65 billion rupees for spectrum in 13 second-and third-tier circles, while Idea Cellular won spectrum in 11 service areas for 57.69 billion.
As per the initial plan, all the operators wanted to get a acquire spectrum in all 22 telecom circles, however, aggressive bidding pushed the price tag for pan-Indian spectrum to $3.6 billion and hence out of reach of the operators. The operators had to cut down to half of the circles as compared to their original targets. Analysts had forecast a pan-Indian footprint would cost in the region of $1.3 billion.
“The auction format and severe spectrum shortage along with ensuing policy uncertainty drove the prices beyond reasonable levels,”
said Bharti.
“As a result, we could not achieve our objective of a pan-India 3G footprint in this round.”
“The fact that most of the companies have not gone and done blanket bidding [for all circles]…clearly shows that each operator has invested in circles where they…have a strong presence,” Manesh Patel, partner with Ernst & Young
told Business Standard.“This will enable the companies to monetise the spectrum in the long run.”
One analyst told telecomasia.net it could take 8-10 years for operators to recover their 3G investment.
In an unprecedented move, Indian government has put a complete ban on the import of telecom network equipment from all the Chinese vendors including ZTE and Huawei. The move will have major repercussions for the Chinese telecom industry as India is one of the biggest and fast growing telecom market of the world. The Chinese companies will lose a lot of business because of this move. According to Hindu Business Line:
The Government has officially told mobile operators not to import any equipment manufactured by Chinese vendors, including Huawei and ZTE. Though the Department of Telecom had been informally telling the operators to keep away from Chinese telecom equipment, this is the first time that it has sent an order banning Chinese gear.
The order was sent out by the DoT on Tuesday to some of the operators that were planning to buy equipment from Chinese manufacturers. The ban order follows concerns raised by the Home Ministry that telecom equipment from some countries could have spyware or malware that gives intelligence agencies across the border access to telecom networks in India.
The Government had earlier banned import of Chinese handsets without IMEI number. The DoT move is a huge blow to ZTE and Huawei that are betting big on the Indian market. ZTE had a record-breaking performance in the last fiscal in India by registering a 50 per cent increase in sales compared with the previous year. The ban also puts the new mobile operators in a quandary as most were banking on attractive financing schemes by Chinese vendors to purchase network equipment. The biggest gainers from the move could be European and American vendors that have been losing market share to aggressive Chinese equipment-makers.
The two major affectees of the decision are ZTE and Huawei, which are already involved in telecom deal in the Indian market. According to Telecom Asia:
The two vendor both have major businesses in the fast-growing India market, which last month racked up 20 millon net mobile adds. Huawei reportedly notched up $1.3 billion in revenue in India last year. Its Bangalore R&D facility is its largest outside China.
ZTE, which sourced $750 million sales from the market in 2009, told the FT yesterday that said the situation was “not normal commercial behavior but something related to political factors. ” The order reportedly came in the wake of Home Ministry concerns that telecom equipment from some countries could contain spyware or malware.
In December, the DoT reportedly amended mobile operator license conditions, with the stipulation that procurement plans from foreign vendors needed security clearance. Since the amendment, the government has been blocking applications involving Chinese vendors, says the FT. This week’s DoT issued order appears to make the blockade of Chinese equipment official.
If the Chinese retaliate to this Indian move, it will severely affect their economic ties and prove to be a major blow to Indian Software industry as they have extensive business dealings in China.
