Quick Edit | Third-generation gap

Quick Edit | Third-generation gap
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First Published: Wed, May 19 2010. 11 39 PM IST
Updated: Wed, May 19 2010. 11 39 PM IST
The government has reason to be pleased with the way the 3G auction has gone. The Rs70,000 crore that will flow into the treasury is more than double the initial expectations.
Telcos which have paid top dollar for the chance to offer high-speed data services to consumers will now have to convince shareholders that they have not overpaid, the infamous winners’ curse.
Ten years ago, similar 3G auctions in several European nations led to a bidding frenzy that left telecom operators with broken balance sheets and battered share prices.
How do we compare? At around 1% of GDP, the Indian bid numbers broadly match the averages seen in Europe 10 years ago.
European telecom firms eventually emerged out of the wreckage, so it is too early to write off the chances of our telecom providers. A lot will depend on two factors. One, will the money for spectrum and the 3G roll-out come from internal cash, or debt? Two, will firms have pricing power in a cut-throat market that has too many players? It’s going to take a lot of hard work.
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First Published: Wed, May 19 2010. 11 39 PM IST
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