The much-awaited 3G auction in India is finally over after innumerable postponing, conundrums, political soup and ring fights.Unsurprisingly, it was the major players who won most of the circles. Among the key winning telcos were Bharti Airtel, Idea, Reliance Communications, Vodafone and Reliance Communications.
Bharti Airtel paid $2.6 billion for 13 circles, Idea paid nearly Rs $1.2 billion for 11 circles; Vodafone paid $2.5 billion for 9 circles while Reliance Communications paid $1.8 billion for 13 circles.
The Indian government, quite unexpectedly, raised a whopping $15bn, almost double what the national exchequer expected.
The key Mumbai and Delhi circles went to operators like Vodafone, Bharti Airtel and Reliance Communications at $694 million and $709 million respectively.
Quite surprisingly, not a single carrier won spectrum on Pan India basis in all the 22 circles. No single carrier won spectrum up for pan India bid in all 22 circles.
The successful bidders, it is rumored, seem to be facing challenges in raising the funds required to make the final buy and roll-outs. Companies are, however, remaining tight-lipped on the issue.
With tariff wars in place, the telcos will find it hard to justify multi-billion dollar spectrum purchases as lower prices squeeze the margins with average revenue per user sinking.
Now, the big question is will it be worth the investment for the successful telcos in the end?
Research firm IDC points out that India is a spectrum-starved market, especially in urban areas. Operators are looking to access spectrum not only to offer new generation data services to consumers in order to boost their earnings, but also to improve the quality of service (QoS) offered under the current 2G regime.
What are the winning bidders going to do differently for 3G in India compared to the countries that have had it for some time?
Naveen Mishra, Lead Analyst, Telecoms Research Practice, IDC India says, “India is a predominantly pre-paid mobile services market. Therefore, the business models of service providers who eventually win the spectrum bids and offer 3G services have to be tailored to this reality.
“India being a ‘young nation’ with an estimated 50% of the population under the age of 35 years is expected to see greater demand for content centered on sports and entertainment. Indian consumers would be able to access new age services such as video-on-demand, live TV etc.”
The BWA (Broadband Wireless Access) spectrum auction will follow the 3G auction and the Indian Government’s funds are expected not only to rise further but also to exceed expectations as well.
The reserve price for BWA spectrum has been set as $375 million for pan-India licence and 11 players are in the race to grab the two slots on the block.
