India's 3G auction underway today
India’s 3G auction kicks off today, with bidding expected to be fierce in the spectrum-starved market of more than one dozen players.
Six incumbents - Bharti Airtel, Reliance Communications, Vodafone Essar, Tata Teleservices, Idea Cellular and Aircel – will battle it out for a pan-Indian 3G footprint.
Smaller GSM1800 players - Videocon, S Tel and Etisalat – are vying for 2100MHz spectrum in selective circles only.
The government is hoping to rake in more than $8 billion (€5.99 billion) from the country’s 3G and upcoming broadband wireless access spectrum auctions, reported the Economic Times.
There’s three spectrum lots to be auctioned in 17 of India’s 22 telecom “circles” or regions, including the four metro circles of Delhi, Mumbai, Kolkata and Chennai .
The remaining five circles - Punjab, Bihar, West Bengal, Himachal Pradesh and Jammu and Kashmir – can each accommodate up to four private players.
Analysts from KPMG India reckon operators bidding for pan-Indian spectrum could end up paying twice the $780 million reserve price, reports ET.
And that could swell the government’s coffers by almost $5 billion, putting the government’s $8 billion target within sights.
State-run operators BSNL and MTNL were awarded 3G spectrum in their respective circles ahead of private operators last year.
The government-run operators’ 3G spectrum price tag will need to match the highest winning bid in each circle.
But, according to ET, the government is reportedly considering refunding part of BSNL’s 3G bill or deferring the payment’s due date by two years so as not to upset BSNL’s financial position.
Meanwhile, value-added service firms predict a 3G revenue windfall.
“3G services will be a significant contributor to our growth,” Manoranjan Mohapatra, chief executive of Comviva told ET.
“We expect 50% growth over our current revenue base,” he said.