Long-delayed India 3G auction set for April

NEW DELHI: India’s long-delayed dollar auction of third-generation (3G) mobile phone bandwidth will be held on April 9, the government announced today.

Applications from bidders for the multi-billion-dollar auction, whose proceeds are earmarked to help plug a gaping fiscal deficit, will be accepted until March 19, a government notice said.

The auction is seen as key to developing India’s mobile market which has been growing by 15 million to 20 million subscribers a month, making it the world’s fastest expanding.

3G, common in developed countries, allows mobile phone users to surf the Internet, engage in video conferencing or download music, video and other content at a much faster rate than the current second-generation or 2G service.

It is also crucial to improving the quality of existing voice and data services in India.

“These auctions cannot come too soon for the (telecom) companies, they need that spectrum to boost their voice networks,” said Harit Shah, telecom analyst at Karvy Stock Broking.

The sale has been postponed three times since it was first slated for January 2009 by disagreements over the base price, number of slots to be sold and bandwidth availability.

The government will auction bandwidth for broadband wireless access, or high-speed wireless Internet, two days after the sale of 3G bandwidth is finished.

The announcement came a day after Telecommunications Minister A. Raja said “all pending issues have been resolved.” Analysts, however, said there still was a lack of information about the number of slots that would be available.

India earlier said it would sell four 3G licences and three broadband wireless access licences in 20 of the country’s 22 telecom zones. It does not have available spectrum to sell in the other two zones.

“The problem is there is a lack of clarity, if there are fewer slots than expected, the price could go higher,” said Romal Shetty, head of telecommunications at global consultancy KPMG’s Indian unit.

Raja said yesterday he could not estimate how much the government would raise through the auctions. In August, he had said the government hoped to get Rs 250 billion or $5.4 billion from the auction but later reports have said it expects $7 billion or more.

The government has set the starting price for auction of nationwide spectrum at Rs 35 billion rupees.

Analysts say bids could go far higher because of the scramble for spectrum in the highly competitive market.

Leading mobile company Bharti Airtel has already said it plans to bid for 3G spectrum as well as second-place Reliance Communications and other market leaders such as Vodafone Essar.

The government had said earlier that “interested foreign entities” could take part in the auctions directly and apply for licences later.

Analysts say that AT&T, which has been eyeing India, could participate along with Australia’s Telstra.

However, the non-Indian players will be required to find Indian partners as the Indian government caps foreign ownership in telecommunication companies at 74 per cent.