Updated since 11:58am EDT to clarify that Qualcomm plans to participate in India's BWA auction.

NEW YORK ( TheStreet -- U.S.-listed companies Qualcomm ( QCOM - Get Report) and Vodafone ( VOD) are participating in the 3G and BWA auction currently under way in India.

The auction for 93 licenses across the country to provide third-generation services to the 586 million mobile phone subscribers in India has already reached $11.6 billion, a level beyond the expectations of participants. Further investments to provide 3G services on a commercial basis from September 2010 will likely take the overall company expenditures to irrational levels.

In contrast, total investments to fund construction of third-generation networks in China for the 770 million mobile phone subscribers totaled $23 billion during the first year of operations, according to data release from China Mobile ( CHL), China Unicorn ( CHU - Get Report) and China Telecom ( CHA - Get Report).

Qualcomm, a leader in developing and delivering innovative digital wireless communications, has a history of getting involved in spectrum auctions that help the commercialization of its wireless technologies. Participation in India's Broadband Wireless Access auction will help the company in accelerating the use of TD-LTE. Unlike WiMAX, TD-LTE does not have a substantial market share for encouraging vendors to develop devices. India's 2.3 GHz spectrum band and rapidly growing demand for high broadband services is well suited for TD-LTE technology.

Vodafone is the second largest cellular service provider in India and has crossed the landmark of 100 million subscribers in the country in April. Vodafone owns 67% of Vodafone Essar, one of the nine participants for 3G auction, after buying out from Hutchison ( HTX) in 2007.

A clear winner in all the circles is unlikely to emerge, as the current 3G prices have surpassed the estimates set by the participants. As smaller entities and new entrants are likely to concentrate on specific circles, an incumbent service provider will find it difficult to win the majority of the circles.

Bharti Airtel, India's telecom giant, is currently utilizing INR80 billion ($1.77 billion) reserves with additional funding plans. Meanwhile, other major industry participants such as Vodafone Essar, Idea Cellular and Tata Communications ( TCL) raised INR100 billion ($2.21 billion), INR95 billion ($2.10 billion) and INR85 billion($1.88 billion), respectively to finance the auctions.

Emergence of Bharti Airtel as a winner in the majority of the service areas will further strengthen its presence in the domestic market. The recent Zain deal has placed Bharati Airtel among the world's top 10 telecom companies. With a subscriber base of 163 million worldwide, the company ranks ahead of AT&T ( T - Get Report), Verizon ( VZ - Get Report), NTT DoCoMo ( DCM) and T-mobile in the number of subscribers.

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.