India's billion-dollar 3G auction set to open

Apr 08, 2010
An Indian farmer talks on his mobile phone as he rests on a pile of mangoes at the Gaddiannaram fruit market in Kothapet, located in the outskirts of Hyderabad. In an auction set to open Friday, India's mobile firms will bid billions of dollars to provide superfast third generation (3G) service in the country's booming cellular market.

In an auction set to open Friday, India's mobile firms will bid billions of dollars to provide superfast third generation (3G) service in the country's booming cellular market.

The government is hoping to reap around eight billion dollars from the sale of 3G airwaves and a follow-up auction of access spectrum in what will be the largest such sale in recent years.

"The major operators will bid aggressively. It will be very important for them to win 3G slots to retain their high-end subscribers," said Kunal Bajaj, managing director at telecoms consulting firm BDA Connect.

The starting price has been set at 780 million dollars for pan-India 3G licences but analysts expect the bidding to go much higher because of the scramble for spectrum in the congested market, which has over a dozen players.

"The bids should be double (the base price)," forecast Romal Shetty, executive director for telecommunications at KPMG’s Indian unit.

Nine of the cellular firms plan to bid for 3G spectrum in the world's fastest-growing .

3G allows to surf the Internet, video conference and download music, video and other content at a much faster pace than the current second-generation or 2G service.

Top such as Bharti Airtel and Reliance Communications will be in the fray as the bidding progresses over several days, with foreign-backed Vodafone Essar and Tata DoCoMo also in the running.

The addition of 3G is seen as giving a major boost to a mobile market already growing by 15 to 20 million subscribers a month. Mobile subscribers totalled 545 million at last count.

But for at least the first year, the main focus for phone companies is expected to be on improving call quality.

JPMorgan said in a report the bidding could "stretch balance sheets" of mobile companies that have already been undermined by fierce tariff battles which have reduced calling costs to less than a cent a minute and hit revenues.

India, a country of 1.2 billion people, is playing catch-up as it is the biggest major economy not to have widespread 3G services.

The country is following in the footsteps of fellow emerging market giant China, which started offering services last year.

Even if India's government gets eight billion dollars for the airwaves, the sum will come nowhere near the 19 billion raised by the US government two years ago and the 35 billion earned by Britain in 2000.

Explore further: Why the SIM card has had its day

add to favorites email to friend print save as pdf

Related Stories

India 3G auction to be held on schedule: minister

Dec 11, 2009

India's long-awaited auction for third generation (3G) mobile telecom services will be held on schedule next month, a minister said Friday, dismissing media speculation of a delay.

India misses deadline for 3G auction

Dec 09, 2009

India's government has missed a deadline for inviting bidders to take part in its long-awaited auction for third generation (3G) mobile telecom services.

India says will start 3G auction in January

Oct 25, 2009

India said Saturday a long-delayed auction of radio bandwidth for third generation (3G) telecommunications services will start in January and will be open to foreign companies.

Recommended for you

Why the SIM card has had its day

Mar 05, 2015

The small microchips known as "subscriber identity modules" or SIM cards that are required for mobile phones to log on to a phone network will soon be 25 years old. While mobile phones and network technology ...

The UK doesn't yet need net neutrality regulations

Mar 04, 2015

The net neutrality debate in the US has ended, at least for now, with the Federal Communications Commission ruling for stricter regulation of telecoms and internet service providers (ISPs) in order to maintain ...

Italy adopts plans to shift into Internet fast lane

Mar 04, 2015

Italy's government adopted a six-billion-euro plan Tuesday to modernise its Internet network and improve access to broadband in hopes of shedding its reputation as one of Europe's online laggards.

Phone firms and the quest for the 5G Holy Grail

Mar 03, 2015

Lightning-quick downloads, driverless cars and remote surgery: telecom firms are racing to develop a new generation of "5G" mobile networks that could start to change the world in five years.

User comments : 0

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.