Still more bad news for telecom operators and 3G hopefuls hits India as the country’s long-awaited 3G spectrum (radio bandwidth) auction has been delayed again. The auction process for 3G WCDMA spectrum, which was scheduled for Jan 14, 2010, has now been postponed until mid-Feb 2010, according to a government source. This is due to lack of available spectrum at this moment.
 
India’s Department of Telecommunications (DoT) needs more time to allocate the required frequencies to the telecom operators. The DoT is currently working with the country’s Ministry of Defense as India’s armed forces have to vacate specific 3G spectrum, a process which could take several weeks. So far, the armed forces have agreed to vacate 25 megahertz (MHz) 3G spectrum by Dec 7, 2009. The government cannot start the auction unless specific frequencies are vacated by the Ministry of Defense.
 
The impending 3G spectrum auction, which was originally scheduled to take place in late 2008/early 2009, was initially delayed due to disputes between the government and DoT regarding the spectrum pricing structure. The DoT announced in Sep 2009 that it will start the auction on Dec 7, 2009. However, this was further delayed to Jan 14, 2010, in Oct 2009.
 
To expedite the spectrum auction process, DoT increased the floor price for bidding for 3G auction to INR35 billion (US$716 million) per operator from the initial price of INR20.2 billion (US$415 million). Moreover, floor bidding price for the WiMax spectrum auction is set at INR17.5 billion (US$360 million).
 
DoT announced in Aug 2009 that it will issue four 3G and three WiMAX spectrum slots nationwide. The 3G and WiMax auctions are expected to fetch more than INR250 billion (US$5 billion).
 
The leading participants in the auction will be the top privately held telecom operators Bharti Airtel, Reliance Communications, Idea Cellular, Tata Teleservices and Vodafone Essar, the Indian subsidiary of Vodafone (VOD). The limited number of available license slots for auction is expected to increase the bidding price.
 
The Indian government has already allotted 3G licenses to the state-owned mobile operators Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd, who launched their 3G services in selected markets in early 2009.
 
In addition to the Indian operators, the government is allowing international carriers to participate in the auctions, a move that will intensify competition in the Indian wireless market which is the second largest in the world (after China).
 
Foreign operators such as Telenor SA, NTT DoCoMo (DCM) and Emirates Telecommunications are expected to bid for the 3G licenses. Moreover, leading international carriers such as AT&T (T), Deutsche Telekom (DT) and France Telecom (FTE) are also likely to utilize this opportunity to carve a niche in the lucrative Indian 3G market. However, they need to secure operating licenses to meet the pre-qualification criteria.
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