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India Resets 3G Date

It's on at last... allegedly... India's 3G spectrum auction is set to kick off on December 7

September 14, 2009

3 Min Read
India Resets 3G Date

Following months of delays, India's 3G and broadband wireless access (BWA) spectrum auctions are set to take place in early December, according to a statement released over the weekend by the country's Department of Telecommunications .

The first auction process, starting December 7, will be for WCDMA spectrum. Two days after that auction ends, the process for CDMA/EV-DO and Broadband Wireless Access (WiMax) spectrum will begin.

Following a year of delays and false starts, the prospective participants now have a detailed timetable. It begins on October 12 with a pre-bid conference, during which the details of the auction will be laid out. Applications will then be taken from October 26 to November 13, with the pre-qualification of bidders taking place on November 27. Mock auctions will then be conducted on December 3 and 4, before the real action starts.

The 3G auctions, which were originally due to take place on January 16, were delayed first for two weeks and then for an indefinite period as the finance and telecom ministries haggled over the reserve price. (See IndiaWatch: 3G Delayed, 2G Adds 10M, India Faces 3G Delay, and Indian Operator Expects Lengthy 3G Delay .)

Last month the reserve was finally set at 35 billion Indian Rupees (US$716.4 million) for each of the five spectrum blocks, which was lower than the finance ministry was reported to want but substantially higher than the original INR20.2 billion ($413.5 million) set for the January auctions. One of those spectrum blocks is reserved for state-owned operators Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL) , which will have to match the highest bids for their respective coverage areas. (See India Auction Countdown and India Sets 3G Spectrum Price.)

The government is anticipating that bids will exceed the reserve price and has budgeted for the auctions to raise $7 billion. (See $7B Target for India's 3G Auctions.)

Amongst those expected to bid are country's three biggest private operators, Bharti Airtel Ltd. (Mumbai: BHARTIARTL), Reliance Communications Ltd. , and Vodafone India . Tata Teleservices Ltd. and Idea Cellular Ltd. are also likely to participate, according to Daniel Yu, senior analyst at Pyramid Research , although he says Tata and Idea may be more selective about the circles (service areas) in which they participate. (See A Guide to India's Telecom Market.)

He adds that other operators without the financial resources to bid will "piggy back" on the 3G networks of others, operating as mobile virtual network operators (MVNOs).

There are also suggestions that international groups, such as AT&T Inc. (NYSE: T), Orange (NYSE: FTE), and Deutsche Telekom AG (NYSE: DT), might use this opportunity to enter the Indian market, but they will need to secure operating licenses in order to meet the pre-qualification criteria.

The winners of the auctions will join BSNL and MTNL in offering 3G services to India's consumers. BSNL began trial services a year ago before going fully commercial, while MTNL launched its services in December 2008. (See BSNL Trials 3G and MTNL Launches 3G.)

Despite having more than a year's headstart, the two have failed to make a massive success of 3G. MTNL, which operates in the major metro areas of Delhi and Mumbai, is reported to have had just 400 subscribers at the beginning of June, and has since sought to outsource its 3G operations to revitalize its hopes. (See MTNL Seeks 3G International Rescue and IndiaWatch: Hold-Ups & Hangovers.)

— Catherine Haslam, Asia Editor, Light Reading

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