India Watch: 3G Update, Ericsson Bumper Deal

With only days until the 3G spectrum auction begins (April 9), further details have emerged about which operators plan to bid for pan-India spectrum.

In the meantime, 2G is where all the current growth is, and Ericsson AB (Nasdaq: ERIC) has landed itself a $1.3 billion deal to help India's mobile market leader bolster its existing network and prepare for 3G. (See Ericsson Scores Bharti Deal.)

Spectrum bid battle shapes up
India's Department of Telecommunications has pre-approved all of the companies that submitted applications to take part in April's 3G and BWA (broadband wireless access) spectrum auctions. (See Bids Flood In for India's Spectrum Auctions.)

And it's possible to tell from the pre-qualification data (specifically, the size of the upfront deposit) which of the hopefuls are planning to bid for pan-India spectrum -- that is, bid for spectrum across all of India's 22 "circles" (service areas). (See A Guide to India's Telecom Market for more on India's circles.)

In the 3G auction -- for spectrum in the 2.1GHz band -- six of the nine bidders have pan-India aspirations: Aircel Ltd. , Bharti Airtel Ltd. (Mumbai: BHARTIARTL), Idea Cellular Ltd. , Reliance Communications Ltd. , Tata Teleservices Ltd. , and Vodafone India .

Etisalat DB Telecom, which is yet to launch its 2G services, is to bid in a majority, but not all, of the circles, while S Tel Pvt. Ltd. and Videocon Telecommunications are set to bid in a small number of select circles.

In the BWA auction -- for spectrum in the 2.3GHz band -- eight of the 11 pre-qualified firms are looking to pick up countrywide airwaves: Aircel, Bharti Airtel, Idea Cellular, Infotel Broadband Services, Qualcomm Inc. (Nasdaq: QCOM), Reliance Wimax, Tata Communications Ltd. , and Vodafone Essar. (See Qualcomm Unveils LTE Plans for India.)

Internet service providers Augere (Mauritius), Spice Internet, and Tikona Digital Networks are set to bid in select circles.

Bharti puts big bucks into 2G
With its subscriber base at 124.6 million (end of February) and growing at nearly 3 million per month, Bharti Airtel is expanding its network, and preparing its infrastructure for the arrival of 3G (so it's confident of emerging from the auction with some spectrum in the bag!).

As part of those efforts, the carrier has awarded Ericsson a $1.3 billion contract to expand and upgrade its network in 15 circles. The Swedish giant will supply: radio access network (RAN) equipment to support GSM, GPRS, and EDGE connections; circuit and packet core equipment; microwave backhaul gear; and "intelligent network" systems to support pre-paid account provisioning, activation, and service management.

The vendor states that part of its job is to "ensure that Bharti Airtel's core and transport network is 3G-ready in order to reduce time to market and enable the fast rollout of 3G services at a later date." They all hope...

Ericsson may be an incumbent provider at Bharti, but it shows how competitive the traditional suppliers can be, even in the face of increasingly stiff competition from the Chinese duo of Huawei Technologies Co. Ltd. and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763).

At the same time, you can bet your bottom dollar that the margins on that deal aren't at the top end of Ericsson's scale.

Other news from the mass market that is India includes:

— Ray Le Maistre, International Managing Editor, Light Reading

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