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Qualcomm,Vodafone to Join India Wireless Auction

Stocks in this article: QCOM VOD CHL

Auction Process

On Monday, May 10, day 26 of the auction, the anticipated revenue from 3G topped INR540 billion ($11.9 billion), nearly 50% higher than the base price of INR350 billion ($7.75 billion), for pan-India spectrum. The prices are set to increase further until telecom operators, one-by-one, decide to drop out from a particular circle.

Meanwhile the country's telecom minister Andimuthu Raja expects the government to earn INR500-550 billion ($11 -$12.2 billion) by selling 3G and BWA spectrum.

So far, the auction status indicates that six circles have excess demand, with Delhi and Mumbai attracting 35.6% of the total bid amount. In contrast, seven circles have on-par demand and nine circles have deficient demand.

The 3G auction includes nine qualified players, while the BWA auction has 12 qualified service providers. Aircel, Bharti Airtel, Idea Cellular, Reliance Telecom, Tata Teleservices, and Vodafone Essar qualified for both auctions.

Other players for 3G auction include Etisalat DB Telecom, S Tel Private, and Videocon Telecommunications. Other players for BWA auction include Augere (Mauritius), Infotel Broadban Services, Qualcomm, Spice Internet Service Provider, and Tikona Digital Networks.

The government has fixed INR35 billion as the reserve price for pan-India 3G auction, and INR17.5 billion for BWA. Auction for BWA will start after the completion of the 3G auction. Three or four blocks of 2x5MHz in the 2.1GHz band would be awarded through 3G auction, whereas two blocks of 20MHz in the 2.3GHz band would be awarded through BWA auction.

India entered the 3G mobile arena with the launch of mobile and data services by government-owned companies, Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTE). In 2008, BSNL launched 3G services in Durgapur, an Indian city located near Kolkata. MTNL launched the services in Mumbai and Delhi. The government assigned 3G license to BSNL for operating in 380 cities by the end of March 2010.

Other Asian giant, China, started 3G mobile network coverage in 2008 as well. However the country entered a more advanced stage in comparison with India.

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