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India 3G auction closes at $15B

Posted: 25 May 2010 ?? ?Print Version ?Bookmark and Share

Keywords:India 3G auction? WiMAX? network?

India's 3G auctions finally concluded May 19, attracting industry bids totaling $15 billion, almost 50 percent above the government's expectations.

However, none of the nine operators bidding for Indian 3G licenses won bandwidth for all of India's 22 service areas.

Bharti Airtel, India's largest private mobile provider, won licenses worth about $2.75 billion while Reliance Communications will pay about $1.9 billion for 3G spectrum. The third largest 3G bidder, Aircel, will pay about $1.45 billion.

Winning bidders have 10 days to pay for their licenses. Two government-owned carriers, BSNL and MTNL, which launched 3G services last year, must pay the same amount as the highest private bid in the regions where they were awarded licenses.

Analysts focused on the auction's failure to produce a single, nation-wide carrier.

According to Nishna Biyani, research analyst at Prabhudas Lilladher, "All the incumbent operators have bid carefully, considering their circles of strength where they enjoy high revenue market shares. Hence, there was no single operator who secured a pan-India 3G spectrum."

"The network rollout for 3G will take another three to six months," Biyani added. "Hence, fiscal 2010-11 will not see much revenues accruing from 3G, but the interest burden on spectrum charges paid would weigh on earnings."

In a research note, Barclays Capital semiconductor analyst Tim Luke said the Indian 3G auctions would provide a modest boost to equipment vendors. "We consider the availability of new spectrum a positive for equipment vendors as the completion of the auctions should pave the way for new network builds," Luke wrote.

While big players like Alcatel Lucent, Ericsson and Nokia should see only "moderate" benefits from the Indian 3G roll out, programmable logic suppliers like "Altera and Xilinx should also be positioned well to benefit from incremental regional equipment" spending, he added.

The $15 billion auction total does not include spectrum auctions starting later this week to provide WiMAX services. Bids for wireless services are expected to draw less interest from carriers.

- K.C. Krishnadas
EE Times

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