India's auction of 3G spectrum is over and prices soared way beyond the expectation of analysts. The damage: $14.5 billion.
Vodafone and Indian competitors Bharti Airtel and Reliance Communications will pay between $1.8 billion and $2.6 billion each for spectrum. The country's leading operators, however, stopped short of paying $3.6 billion each for pan-Indian spectrum, buying only in a limited number of the country's 22 regions.
India's largest mobile operator, Bharati, spent $2.6 billion on spectrum in 13 regions, while Vodafone bought spectrum in nine regions for $2.5 billion. Reliance spent $1.8 in 13 regions.
Bharti, however, was clearly disappointed by the auction process: "The auction format and severe spectrum shortage along with ensuing policy uncertainty drove the prices beyond reasonable levels," the company said. "As a result, we could not achieve our objective of a pan-India 3G footprint in this round."
Heavy competition already happening in the Indian market coupled with the steep prices of the 3G licenses are making investors nervous. India's 15 operators are currently engaged in a heavy price war, and Vodafone this week wrote down the value of its Indian business by more than 25 percent because of the price wars.
Mobile broadband licenses are on the auction block next.
- see this Financial Times article
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