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India 3G auction fetches Rs.69,265.50 crore

Posted: 24 May 2010     Print Version  Bookmark and Share

Keywords:3G auction  India 3G 

India's much awaited 3G auction concluded on May 19 with a total of Rs.69,265.50 ($15 billion) crore but did not establish a single pan India carrier.

The month-long 3G auctions attracted almost 50 per cent above the government's expectations. However, none of the nine operators bidding for Indian 3G licences won bandwidth for all of India's 22 service areas.

Bharti Airtel, India's largest private mobile provider, won licences worth about Rs.12,698.68 crore ($2.75 billion) while Reliance Communications will pay about Rs.8,773.63 crore ($1.9 billion) for 3G spectrum. The third largest 3G bidder, Aircel, will pay about Rs.6,695.67 crore ($1.45 billion).

Winning bidders have 10 days to pay for their licences. Two government-owned carriers, BSNL and MTNL, which launched 3G services last year, must pay the same amount as the highest private bid in the regions where they were awarded licences.

Analysts focused on the auction's failure to establish a single pan India carrier. According to Nishna Biyani, research analyst at Prabhudas Lilladher, "All the incumbent operators have bid carefully, considering their circles of strength where they enjoy high revenue market shares. Hence, there was no single operator who secured a pan-India 3G spectrum. "The network rollout for 3G will take another three to six months," Biyani added. "Hence, fiscal 2010-11 will not see much revenues accruing from 3G, but the interest burden on spectrum charges paid would weigh on earnings."

In a research note, Barclays Capital semiconductor analyst Tim Luke said the Indian 3G auctions would provide a modest boost to equipment vendors. "We consider the availability of new spectrum a positive for equipment vendors as the completion of the auctions should pave the way for new network builds," Luke wrote.

While big players like Alcatel Lucent, Ericsson and Nokia should see only "moderate" benefits from the Indian 3G roll out, programmable logic suppliers like "Altera and Xilinx should also be positioned well to benefit from incremental regional equipment" spending, he added.

The Rs.69,265.50 ($15 billion) auction total does not include spectrum auctions starting later this week to provide WiMAX services. Bids for wireless services are expected to draw less interest from carriers.

- K.C. Krishnadas
TechOnline India

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