Vodafone, Bharti Airtel Win India 3G Spectrum

Vodafone and Bharti paid a combined $5.1 billion for 3G mobile licences in India, ending an epic auction that yields a bonanza for a deficit-strapped government but puts winners under pressure. Reliance Communications also won the right to provide third-generation services in an auction that lasted 34 days and will generate $14.6 billion for the government, authorities said on Wednesday, nearly twice what it had expected.

“It’s good news for the government, no doubt,” said Arun Kejriwal, Strategist, Kris Research. “For the operators it’s a large sum of money that has to be paid out. We have to see how these services are priced and received by the subscribers and how it will impact their profitability,” he said.

India is the world’s fastest growing mobile phone market with some 500 million subscribers. India’s three biggest carriers – Vodafone, Bharti Airtel and Reliance Communications – each won key licences to offer 3G services in Delhi and Mumbai. Seven different carriers, including Idea Cellular and unlisted Tata Teleservices, ended up winning spectrum. Japan’s NTT DoCoMo owns 26 percent of Tata Teleservices. A fourth licence will be sold separately and has been reserved for state operators.Vodafone Essar, the UK giant’s India unit, will pay about $2.5 billion for its India 3G mobile spectrum, according to government data, and said it planned to launch a service by year-end. Bharti, one-third owned by SingTel, is paying about $2.6 billion but India’s top carrier said it fell short of its objective of securing a pan-India footprint due to high prices.

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“Obviously, the spectrum pricing looks very high, but if you look at 500 million subscribers, that 3G has the potential as it can be used for both voice and data, the spectrum price may be viable,” said Naresh Singh, Analyst, Gartner. The 3G auction will be followed in two days by an auction for wireless broadband spectrum, for which 11 firms are vying for two national licences for private operators, with one slot reserved for state telecoms firms.