New companies to bid for 3G spectrum

 Predictably, the 3G auctions have attracted only existing 2G players -- Aircel, Bharti, Etisalat, Idea, Reliance Telecom, S Tel, Tata Teleservices, Vodafone and Videocon Telecom -- with not a single new entrant, global or Indian, in the list.

TOI was the first to predict, way back on August 12, 2008, that new players would probably stay away from the 3G auctions after the auctions were first announced. Even after the guidelines were revised for the 2010 auctions, the barriers for new entrants remained unchanged. The absence of global bidders is likely to ensure that the bidding will be conservative, and probably lower than the ambitious Rs 40,000 crore revenue target first announced by telecom minister A Raja.

The BWA list has four new players -- Augere, Tikona Wireless, Infotel Broadband Services and Qualcomm -- while Spice is making a comeback into the telecom space. Infotel belongs to Anant Nahatta, the son of HFCL owner Mahendra Nahatta.
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It could not be confirmed if these are all pan-India applications or if players will eventually bid only for select circles. DoT is meeting at 11.30am on Saturday, March 20 to screen the applications. "We will check to see if the applicants meet the licence criteria. For example, no company can hold more than 10% in another applicant company," a senior DoT official told TOI.

The simultaneous, ascending auction designed by auctioneer N M Rothschild enables bidders to bid from their own computer screen with the value of the highest bid and number of bidders in each round for each circle visible to each player, the DoT official added.

However, he declined to reveal what the revenue expectations from these auctions were. "We expect it to be a good auction on the back of robust demand," he said. However, the government recently said it expects to earn at least Rs 30,000 crore from the auction proceeds.
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The reserve price for pan-India 3G spectrum is Rs 3,500 crore and the bids could go anywhere in the range of Rs 6,000 to Rs 8,000 crore for each pan-India slot. For BWA auctions, the reserve price is Rs 1,750 crore with bids expected in the range of Rs 2,000 to Rs 3,000 crore per pan-India slot.

However, data revenue growth in the near term is not expected to be robust enough to justify extravagant bidding, as India is primarily a voice market with over 97% of the market still vanilla voice with rock bottom ARPUs (average revenue per user) of less than Rs 200.

"Unrealistically high 3G bids were witnessed in the UK, France and Germany in early 2000 because large tranches of spectrum were on offer and data growth was expected to take off. However, data has been slow to grow globally. The US is the largest data market today and this growth has only been fuelled lately after the launch of the Apple iPhone," said a telecom expert.

The 3G auctions are scheduled to begin on April 9. The government is auctioning three 2x5 MHz slots in the 2.1 GHz band in Delhi, Mumbai, Kolkata, Maharashtra, Gujarat, Andhra, Karnataka, Tamil Nadu (including Chennai) and Kerala (all A Category circles), Haryana, UP East, UP West, Rajasthan, MP (all B Category circles), Orissa, Assam and North East (all C Category circles). Four slots are on offer in Punjab (Category A), West Bengal (Category B), and Himachal and Bihar (Category C).

BWA auctions for two pan-India slots of 20 MHz each will begin after the close of the 3G auctions. BWA is used for high-speed data and video applications. 3G is also a technology that is preferred for data - essentially for triple play or voice, data and video which is far superior to the 2G networks used in India.

Source: http://www.prlog.org/10585068-new-companies-to-bid-for-3g-spectrum.html