The top seven of the eight 3G auction winners are also slated to participate in the BWA (broadband wireless access) auction that will start next week. They will be joined by an eclectic mix of companies such as Tikona Digtal, Spice Communications, Augere, Qualcomm and HFCL (Himachal Futuristic Communications Ltd.).
It will be interesting to see how much these companies are prepared to bid above the reserve price of Rs 1,750 crore, since only two 20 MHz slots of BWA spectrum are on the block for each circle. The stakes are high since beyond another fiscal windfall the Indian Government is counting on BWA as a key to raising broadband Internet penetration throughout the country. Several key questions remain unanswered as the Indian BWA auction looms large:
<h1 style="margin-left: 27.0pt; text-indent: -.25in; mso-list: l0 level1 lfo1;">· Which of the mobile operators will opt out of the BWA bidding to focus on 3G? </h1>
<h1 style="margin-left: 27.0pt; text-indent: -.25in; mso-list: l0 level1 lfo1;">· How much capital will they have left to investment in BWA spectrum after the extended auction ran up the cost for 3G licenses? </h1>
<h1 style="margin-left: 27.0pt; text-indent: -.25in; mso-list: l0 level1 lfo1;">· Will partnerships form to narrow the field and avoid another prolonged auction process and ultimately overpaying? </h1>
<h1 style="margin-left: 27.0pt; text-indent: -.25in; mso-list: l0 level1 lfo1;">· How will the resulting spectrum cost influence the business case for the winning BWA licensees?</h1>
<h1 style="margin-left: 27.0pt; text-indent: -.25in; mso-list: l0 level1 lfo1;">· How will the WiMAX and TD-LTE competition play out given Qualcomm’s quest for Indian partner?</h1>
If I heard correctly, Vodafone CEO, Vittorio Colao, said on the firm's earnings call yesterday that he expected 40 percent 3G penetration in India in seven years.
Not clear if that was across the total market or in urban markets, but, still, that's going to add up to a lot of 3G subscribers.