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3G/HSPA

India's 3G Auction Ends, Raises $14.6B

After 34 days of bidding, India's 3G spectrum auction has come to an end, raising 677.2 billion Indian rupees (US$14.63 billion) in fees.

No one operator won spectrum in all of India's 22 circles (service areas). Three carriers -- Aircel Ltd. , Bharti Airtel Ltd. (Mumbai: BHARTIARTL), and Reliance Communications Ltd. -– won spectrum in 13 circles, though because they won in different areas they will pay different amounts. Bharti Airtel's total 3G spectrum bill is INR123 billion ($2.66 billion), while Reliance will shell out INR85.9 billion ($1.86 billion) and Aircel INR65 billion ($1.4 billion).

Idea Cellular Ltd. was successful in 11 circles, for which it will pay INR57.7 billion ($1.25 billion).

Tata Teleservices Ltd. and Vodafone India both won spectrum in nine circles, and startup operator S Tel Pvt. Ltd. has 3G spectrum in three circles. Fellow newcomers Etisalat DB and Videocon Telecommunications Ltd. (a.k.a. Datacom Solutions) failed to win any licenses.

The country's three leading mobile players -- Bharti Airtel, Reliance Communications, and Vodafone Essar -- each prevailed in the key metro markets of New Delhi and Mumbai, where the licenses will cost INR33.17 billion and INR32.47 billion ($717 million and $702 million), respectively. State-owned operator Mahanagar Telephone Nigam Ltd. (MTNL) has already been handed spectrum in those cities -- now it will have to pay INR65.64 billion ($1.42 billion) for that capacity.

The other state-owned operator, Bharat Sanchar Nigam Ltd. (BSNL) , will have to pay the equivalent of the winning bids in the 20 other circles, where it already has 3G capacity. That will cost the carrier INR101.9 billion ($2.2 billion).

The end of the 3G auction now sets the scene for the next sale of Indian wireless airspace, as the BWA (broadband wireless access) auction will start in two days, with 11 bidders (including some that have just finished the 3G marathon) involved. (See Bids Flood In for India's Spectrum Auctions.)

— Ray Le Maistre, International Managing Editor, Light Reading

Gabriel Brown 12/5/2012 | 4:35:48 PM
re: India's 3G Auction Ends, Raises $14.6B

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.


 

bergea 12/5/2012 | 4:35:44 PM
re: India's 3G Auction Ends, Raises $14.6B

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;">&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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;">&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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;">&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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;">&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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;">&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; How will the WiMAX and TD-LTE competition play out given Qualcomm&rsquo;s quest for Indian partner?</h1>

Gagandeep Kaur 12/5/2012 | 4:35:43 PM
re: India's 3G Auction Ends, Raises $14.6B

Spectrum is so scarce in India&nbsp;that it is unlikely that any operator will let an opportunity to garner more pass by. Bidding for BWA is likely to be as fierce as 3G. The debt will increase for the bidders and the breakeven time will increase but feedback from the market says that they are unlikely to bow out of the auction.

bergea 12/5/2012 | 4:35:43 PM
re: India's 3G Auction Ends, Raises $14.6B

Affiliates of the top seven of the eight 3G auction winners are also slated to participate in the BWA auction that will start next week.&nbsp; They will be joined by an eclectic mix of companies, such as Tikona Digital, Spice Internet, Augere, HFCL Infotel and Qualcomm.&nbsp; It will be interesting to see how much these companies are prepared to bit above the reserve price of Rs 1,750 crore, since only two 20 MHz slots of 2.3 GHz BWA spectrum are on the block for each circle.&nbsp; The stakes are high since beyond another fiscal windfall the Indian Government is counting on BWA as the key to raising broadband Internet penetration throughout the country.&nbsp;


Several key questions remain unanswered as the India BWA auction looms large:

<ul>
<li>Which of the mobile operators will opt out of the BWA bidding to focus on 3G</li>
<li>How much capital will they have left to invest in BWA spectrum after they pay for 3G</li>
<li>Will partnerships form to narrow the firld and avoid another prolonged and costly auction?</li>
<li>How will the resulting spectrum cost influence the business case for the winning BWA licensees?</li>
<li>How will the WiMAX and&nbsp;TD-LTE competition play out given&nbsp;Qualcomcomm's quest for an&nbsp;Indian operator partner?</li>
</ul>

&nbsp;Stay tuned.&nbsp;

bergea 12/5/2012 | 4:35:42 PM
re: India's 3G Auction Ends, Raises $14.6B

Qualcomm is registered to bid in the BWA auction to start next week.&nbsp; All we know is that they are seeking an Indian operator to partner with in deploying a TD-LTE network.&nbsp;

desiEngineer 12/5/2012 | 4:35:42 PM
re: India's 3G Auction Ends, Raises $14.6B

Did they get any spectrum?&nbsp; Speculations on what they want to do with spectrum?


-desi

Gabriel Brown 12/5/2012 | 4:35:40 PM
re: India's 3G Auction Ends, Raises $14.6B

One would assume that price per MHz/PoP will be a lot lower in the BWA auction than the 3G auction just gone.

Gagandeep Kaur 12/5/2012 | 4:35:38 PM
re: India's 3G Auction Ends, Raises $14.6B

I think so too--that the final price per MHz/PoP will be much less than 3G auction. This is reflected in the base price also. BWA base price is just INR 17.5 bn as compared to INR 35 bn for 3G. But percentage increase from base price might be similar...

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