3G auction earns India 14.6 billion dollars

May 19, 2010
An Indian man walks past an advertisement for 3G telecom services in New Delhi in April 2010. India's auction of third-generation (3G) bandwidth for mobile telephone services ended Wednesday, with final bids securing the government a windfall of close to 15 billion dollars.

India's auction of 3G bandwidth for mobile telephone services ended Wednesday, with final bids earning the government close to 15 billion dollars -- double its own estimate.

The provisional results were posted on the Department of Telecommunications website after 34 days of frenetic bidding that saw the price of a pan-India licence soar to more than 3.6 billion dollars -- way beyond the reserve price.

Nine cellular firms, including Indian market leaders Bharti Airtel and Reliance Communications, had participated in more than 180 rounds of bidding.

The provisional winning price for one slot of bandwidth to offer super fast third-generation services across India was 168.2 billion rupees (3.6 billion dollars), from a starting bid price of 35 billion rupees.

None of the bidding firms won 3G mobile spectrum in all 22 service areas up for grabs, but Bharti, Reliance and Vodafone Essar all won spectrum in the key -- and most expensive -- Delhi and Mumbai areas.

The government's provisional revenue from the sale was estimated at 677 billion rupees (14.6 billion dollars), which will go a long way to plug a yawning budget deficit.

The government had originally budgeted revenue of 350 billion rupees from the auction, which is seen as propelling India decisively into the Internet era.

There are nearly half a billion mobile phone subscribers in India, only a fraction of whom have access to the Internet via computers. New will give people fast access to the web from their handsets.

But analysts say the high cost of the 3G spectrum could strain the balance sheets of India's telecom companies, which are already under pressure from a savage price war in the congested .

"There is not going to be any quick payback," KPMG telecoms analyst Roman Shetty told AFP, predicting companies would only start earning money from their investments in four or five years.

Bharti, India's largest , and Reliance each posted winning bids in 13 regions at a total cost respectively of 123 billion rupees and 85.9 billion rupees.

The hefty final bids will prove a financial headache for state-owned telecom firms BSNL and MTNL, who were awarded 3G spectrum a year back on condition that they would match the auction prices.

3G allows mobile phone users 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.

India is the biggest major economy not to have widespread 3G services. Fellow emerging market giant China started offering them last year.

The winners will be awarded spectrum in September, which means rollout of 3G services will be possible only by the end of 2010 or early 2011.

For at least the first year, the main focus is expected to be on improving call quality. 3G uptake in India is expected to be slow in the initial stages as 3G handsets are costlier than 2G handsets.

Explore further: US proposes pay-for-priority Internet standards (Update 3)

add to favorites email to friend print save as pdf

Related Stories

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

Apr 08, 2010

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.

India plans 4G mobile sale: report

Apr 14, 2010

India plans to hold an auction of ultra-high-speed fourth-generation (4G) mobile phone spectrum soon after completion of 3G access now underway, a report said Wednesday.

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.

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.

Recommended for you

Internet TV case: US justices skeptical, concerned

Apr 23, 2014

Grappling with fast-changing technology, U.S. Supreme Court justices debated Tuesday whether they can protect the copyrights of TV broadcasters to the shows they send out without strangling innovations in ...

Hundreds in Mexico protest telecommunications law

Apr 23, 2014

Hundreds of students and activists marched in Mexico's capital Tuesday to protest a telecommunications law being debated by the Senate that they say will allow the government to arbitrarily censor Internet content.

User comments : 0

More news stories

Genetic code of the deadly tsetse fly unraveled

Mining the genome of the disease-transmitting tsetse fly, researchers have revealed the genetic adaptions that allow it to have such unique biology and transmit disease to both humans and animals.

Ocean microbes display remarkable genetic diversity

The smallest, most abundant marine microbe, Prochlorococcus, is a photosynthetic bacteria species essential to the marine ecosystem. An estimated billion billion billion of the single-cell creatures live i ...