India Sets 3G Spectrum Price



India's carriers are, at last, preparing for the long-delayed auction of 3G and WiMax spectrum following a critical pricing decision by the Indian government, which has set the base prices for the country's 3G and WiMax spectrum.

The starting price for each slot of 3G spectrum is 35 billion Indian Rupees (US$716.4 million), lower than the INR40.4 billion ($827 million) price previously signaled by the government but higher than the original INR20.2 billion ($413.5 million) price suggested. (See $7B Target for India's 3G Auctions.)

Five blocks of pan-India 3G spectrum are available, but one has already been allocated and divided up between state-owned carriers Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL) , which have already launched their initial 3G services. (See MTNL Seeks 3G International Rescue and BSNL Does 3G With Ericsson.)

MTNL operates in the metro service areas, or "circles," of New Delhi and Mumbai, while BSNL operates in the other 20 circles. Both will pay for their spectrum once the auction is complete, with the price being equal to the highest bid at the end of the auction process. (See A Guide to India's Telecom Market.)

That leaves four blocks for the auction, which is now set to take place before the end of November. Bids are expected from the likes of Bharti Airtel Ltd. (Mumbai: BHARTIARTL), Reliance Communications Ltd. , Vodafone India , Idea Cellular Ltd. , Tata Teleservices Ltd. , Aircel Ltd. , Sistema Shyam TeleServices Ltd. , Unitech Wireless, and others.

The base price for each of the three available blocks of WiMax spectrum, which will be auctioned separately, has been set at INR17.5 billion ($358 million).

Local media reports, such as this one from the Economic Times, quote telecom minister A Raja as saying the government expects to raise INR250 billion ($5.11 billion) from the spectrum sales.

The 3G auction had been set to take place early this year, but was subject to repeated delays that have allowed BSNL and MTNL to steal a march on their privately owned rivals. (See India Faces 3G Delay.)

— Ray Le Maistre, International News Editor, Light Reading

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