The Indian telecom regulator Department of Telecommunication (DoT) has divulged the names of the bidders for the upcoming 3G WCDMA spectrum (radio airwave) and broadband wireless access (BWA) auction in the country. The auctions have attracted 20 applicants who will vie for a chunk of the spectrum to roll-out next-generation services in the world’s fastest growing wireless market.
A total of 9 companies have enrolled to bid for the 3G auction while the BWA auction will have 11 bidders. The 3G bidders include major privately-held carriers Bharti Airtel, Vodafone’s (VOD) Indian arm Vodafone Essar, Tata Teleservices, Reliance Communications, Idea Cellular and Aircel.
The remaining 3G applicants are the minnow S Tel and new entrants such as UAE-based Emirates Telecommunication Corporation (Etisalat) and Videocon Telecommunications. Etisalat is yet to launch its 2G GSM service in India while Videocon has begun rolling out 2G services recently.
State-run Mahanagar Telephone Nigam Ltd. (MTE) and Bharat Sanchar Nigam Ltd (BSNL), who already have 3G licenses, will not participate in the auctions. The DoT has reserved one block of both 3G and BWA spectrum for these operators.
The applicants for the BWA auctions include local players such as Bharti Airtel, Vodafone Essar, Reliance, Idea, Tata Communications, Aircel and Spice Internet. Others are newcomers Tikona Digital, Infotel Broadband, UK-based wireless broadband operator Augere Holdings and the surprise applicant Qualcomm (QCOM).
Qualcomm’s application is aimed at fostering the rapid deployment of TD-Long Term Evolution (LTE), a 4G wireless broadband standard. The chip maker intends to partner with an established Indian operator (or operators) following the auction for construction and roll-out the TD-LTE network. Qualcomm plans to exit the venture later.
However, the supporters of WiMax (another leading 4G standard) are lobbying against Qualcomm’s application stating that the chip vendor’s participation in the BWA auction could disrupt the prospects of the WiMax technology in India.
Interestingly, international telecom heavyweights, such as AT&T (T), Verizon (VZ), France Telecom (FTE), Deutsche Telekom (DT), BT Group (BT) and Australia’s Telstra, who were likely contenders, have shunned the spectrum auctions. The probable reason for this could be uncertainty on spectrum availability and high cost of service deployments.
Moreover, new entrant Uninor (a joint venture between Norwegian telecom giant Telenor and India’s Unitech Group), which launched services in late 2009, will not bid for the auctions. A similar stance has been taken by the CDMA operator Sistema Shyam TeleServices (MTS India), the Indian operation of Russian wireless behemoth Mobile TeleSystems (MBT). Uninor is skipping the auction as the entity is yet to receive the 2G spectrum it has already paid for.
However, foreign operators who already hold stakes in Indian operators will bid in the auctions. Vodafone (applied through Vodafone Essar), Bahrain Telecommunications (holds 49% in Chennai-based S Tel), Etisalat (holds 45% in its Indian subsidiary Etisalat DB) and Malaysia’s Maxis Communications (owns 74% in Aircel) falls in this category.
The DoT will auction 3-4 blocks of spectrum in the 2.1 gigahertz (GHz) band for 3G and two blocks in the 2.3 GHz band for BWA in 22 service areas (called “circles”). The floor price for 3G and BWA auction has been set at INR35 billion (US$716 million) and INR17.5 billion (US$360 million), respectively. The 3G and BWA auctions are expected to fetch at least INR 250 billion (US$5.5 billion).
Ownership details of the applicants and issue bidder compliance certificates will be published on Mar 23 and Mar 26, respectively. Pre-qualification of bidders will be held on Mar 30. Mock auctions will take place on Apr 5 and 6, followed by 3G auction on Apr 9, 2010 and BWA auction on Apr 11. Winning bidders have to pay for their licenses within 10 days following the auction closure.
Successful bidders will be allowed to launch commercial services from Sep 1, 2010. Operators have to comply with deployment obligations by covering at least 90% of the metro service areas with 3G within five years from obtaining their spectrum licenses.
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