Vodafone, Bharti win key 3G spectrum

Vodafone, Bharti win key 3G spectrum

New Delhi: Vodafone, Bharti Airtel and Reliance Communications won 3G mobile spectrum in the key Mumbai and Delhi circles as an Indian auction that had far exceeded bid expectations ended on its 34th day.

Nine private operators participated in the auction for three licences that will generate roughly $11 billion for a deficit-strapped India government and ended with no single carrier winning high-speed third-generation spectrum in all 22 circles up for bid.

A fourth licence will be sold separately and has been reserved for state operators.

Vodafone Essar, the UK giant’s India unit, will pay about $2.5 billion for its India 3G mobile spectrum, according to data on a government website. Bharti, the country’s biggest carrier, is paying about $2.6 billion.

“It’s good news for the government no doubt," said Arun Kejriwal, strategist at Kris Research in Mumbai.

“For the operators it’s a large sum of money that has to be paid out. We have to see how these services are priced and received by the subscribers and how it will impact their profitability," he said.

Bidding surpassed expectations and will help the government plug its fiscal deficit, which last year reached a 16-year high.

The outcome of the auction is expected to exacerbate the gap between the haves and the have-nots in India’s crowded and fiercely competitive mobile market and eventually trigger a wave of consolidation.

It will also put pressure on the winners, who are paying more than expected for the right to provide high-speed data services, to justify their outlays.

The government was selling four sets of national licences -- three from the auction and one to state-run telecoms firms which would have to match the highest bid price paid by the private operators -- plus some extra licences per zone.

The 3G auction will be followed by an auction for wireless broadband spectrum, for which 11 firms are vying for two national licences for private operators, with one slot reserved for state telecom firms.

India is a late adapter of 3G and is the biggest economy not to offer such premium services on a wide scale, although the state-run telecoms firms have 3G services in some zones.

China, the world’s biggest telecoms market, took a long-delayed 3G plunge last year by awarding licences to the country’s top-three phone operators.

In 2000, the UK raised more than $35 billion from a spectrum auction, while Germany collected about $67 billion from its UMTS licence auctions. In 2008, the United States raised $18 billion from spectrum auction.