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Top telcos weigh in with 3G bids

Top telcos weigh in with 3G bids
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First Published: Fri, Mar 19 2010. 01 15 AM IST

Updated: Fri, Mar 19 2010. 02 11 PM IST
New Delhi: India’s top four private mobile phone service providers on Thursday applied to bid for 3G radio spectrum across the country, after more than a two-year wait for the auction.
Executives at Bharti Airtel Ltd, Reliance Communications Ltd, Vodafone Essar Ltd and Tata Teleservices Ltd, the country’s biggest mobile phone operators, confirmed their companies have filed applications for the 3G spectrum auction.
The government will auction 3G spectrum on 9 April.
3G, or third generation, technology allows for more efficient use of spectrum at higher frequencies, enabling greater capacity for voice and data usage on mobile phones.
The government plans to auction up to four slots of 3G spectrum wherever available. The reserve price for the auction has been set at Rs3,500 crore per slot across India.
As per a notice of the department of telecommunication (DoT) inviting applications earlier this month, there are only five telecom service areas with four slots—Bihar, Jammu and Kashmir, Punjab, West Bengal and Himachal Pradesh.
The auction for 3G spectrum has been delayed by at least two years due to the government’s indecisiveness over the availability of spectrum and the number of operators to be allowed in each circle.
The deadline for submitting applications to DoT for 3G auction ends on Friday.
Dubai-based Etisalat DB Telecom Pvt. Ltd, too, has filed to bid for 3G spectrum, though it is yet to launch operations with the 2G spectrum it has been allotted.
Idea Cellular Ltd and Aircel Ltd, India’s fifth and sixth largest private mobile phone firms, are expected to file their applications on Friday morning.
Successful bidders would be allowed to offer 3G services on commercial basis from 1 September.
“Placing the applications may not be that important as the firms may or may not bid,” a senior executive with one of the top three telecom firms said on condition of anonymity. “They have to make a compulsory first bid in each circle but they may not make a second bid.”
Another executive with another telecom firm said these firms have to submit a bank guarantee of Rs1,000 crore to apply to bid for the auction and could lose up to Rs1 crore if they did not win any spectrum in a particular circle.
“That is a very small amount for the telcos given the firms involved and the amount that the bids are expected to go (for),” the executive said, requesting anonymity.
Rahul Singh and Gaurav Malhotra, analysts with Citi Investment and Research, wrote in a 16 March report that the “timing (before revised spectrum guidelines), fewer slots (three versus four earlier) and improved liquidity conditions have raised the risk of increased bid intensity.”
They added that the fewer slots would likely drive up the bid price, especially in metros where 3G will be used as a deterrent to post-paid churn after mobile number portability.
Vodafone, with almost 95 million subscribers as at end-January, has applied for broadband wireless access (BWA) spectrum as well.
Firms that filed applications for BWA spectrum include Tikona Broadband and Tata Communications Ltd.
BWA spectrum is necessary for rolling out Wimax services to significantly increase broadband penetration, especially in far-flung areas where cables cannot reach.
Qualcomm Inc., which owns the 3G technology, announced on Wednesday it had applied for BWA spectrum and planned to use it for a new technology called TD-LTE, which rivals Wimax.
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First Published: Fri, Mar 19 2010. 01 15 AM IST