Wednesday, May 19, 2010

The Great Indian 3G Auction

The Indian Govt.'s provisional revenue from sale of 3G reached Rs.66,802.48 crore ($14.7 billion) and the nationwide licence price was Rs.16,531.34 crore ($3.6 billion) at the end of 180 rounds. At the end of the 33rd day of the 3G auction, which began April 9, the pan-India 3G licence was 372 percent higher than the Rs.3,500 crore reserve price. 
With aggressive bidding in a few circles, the government is poised to get more than Rs.70,000 crore from the 3G auction alone. The Govt. had estimated to rake in Rs.55,000 crore from both the 3G auction and the rolling out of broadband wireless Internet services.
Bharti Airtel, Reliance Communications, Vodafone Essar, Idea Cellular, Tata Teleservices, Aircel, Etisalat, S Tel and Videocon Telecommunications - are participating in the online auction process which will end only when the demand is equal to the number of slots available in each circle. Airtel and Idea need the 3G spectrum if they are to stay in the telecom business any longer. They're stocks have already started tumbling down with all the recent churning that was seen in this sector.
The government has already given Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) spectrum for 3G services on the condition that they pay the same licence fee as would be levied on private players after the auction. BSNL has already started providing 3G services in all major cities trying to make the most out of their headstart in this spectrum.
The ongoing 3G auction is a simultaneous auction for the 22 circles over a secure website. At each round, the price is hiked around 10% based on demand. The successful bidders would be allowed to offer 3G services on a commercial basis from Sep 1.

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