New Delhi, May 20: After 34 days of competitive bidding, auctions for India’s third-generation airwaves drew to a close on Wednesday, throwing open doors for faster data services and making the government richer by Rs 67,718.95 crore. At this price, the cost of one Mhz of 3G spectrum works out to Rs 1,675 crore. In comparison, 4.4 MHz of 2G spectrum and licence were doled out at a paltry Rs 1,651 crore by telecom minister A Raja in January 2008.
Operators will now have to cough up the amount within the next 10 days. With Broadband Wireless Access (BWA) spectrum going under the hammer in the next two days, the government is poised to mobilise at least another Rs 14,000 crore, according to initial estimates by analysts.
Apart from the impressive revenues, the other major highlight of the auctions is that no operator has won 3G spectrum for all 22 telecom circles. The big winners were Bharti Airtel, Reliance Communications and Aircel, which have bagged spectrum in 13 circles each. Idea Cellular won spectrum for 11 circles, while Vodafone-Essar and Tatas (Tata Teleservices and Tata Teleservices Maharashtra combined) won 9 circles each.
The state-owned BSNL, which was allocated spectrum more than a year back and has already started 3G services in several circles would be the only operator with a pan-India presence. This also means that it would have to pay Rs 10,185.90 crore.
Only one new service provider�S Tel�bagged spectrum in three circles, while the other two � Etisalat DB and Videocon � drew a blank. Uninor, in which Norway’s Telenor holds 67.25% was the only GSM operator which did not participate in the auctions.
The closing bids were highest for Delhi and Mumbai at Rs 3,316.93 crore and Rs 3,247.07 crore respectively, clearly establishing that 3G has best prospects in these two circles. Further, these are the two circles where operators face a 2G spectrum crunch. Winning 3G spectrum here will help them migrate high-end users to 3G and accommodate more users in the 2G space.
Trends from the bidding process reveal smart thinking by the telcos. With prices surging beyond Rs 10,000 crore, the players have focused on regions where they are strong and see clear potential for growth, rather than burn money chasing all 22 circles.
While Bharti, Reliance and Aircel have bagged 13 circles each, the outgo is different for the three. Bharti would fork out the highest at Rs 12,295 crore, with Reliance paying Rs 8,600 crore and Aircel Rs 6,134.89 crore. This is because Bharti has bagged the most lucrative circles, where reserve price and competition were the highest.
“Apart from Delhi and Mumbai which saw emotional bidding, the price is high in other circles, but not exorbitant. There has been a fairly good distribution of circles among operators and no operator has taken a high exposure,” Prashant Singhal of E&Y said.
Most of the operators have already raised around Rs 10,000 crore for 3G bids.
Commenting on the auctions, Bharti said: “Winning in 13 key circles gives us a strategic footprint and an opportunity to provide 3G services in significant markets including key metros and Category-A circles. However, we would like to point out that the auction format and severe spectrum shortage along with ensuing policy uncertainty, drove the prices beyond reasonable levels. As a result, we could not achieve our objective of pan-India 3G footprint in this round.”
Aircel chief operating officer Gurdip Singh echoed his views: “This further opens new revenue opportunities and gives way to a dynamic business model. We now cover the whole of southern and eastern belt�where we have our strong presence�and in J&K, Punjab and UP (East) as well.”
Vodafone-Essar CEO and managing director Marten Pieters said: “Vodafone Essar has secured a critical strategic footprint across the country, particularly in markets where we expect the main demand for 3G services to be in the next few years.
We expect a strong uptake for 3G in these markets particularly among the higher value customers, which is a growing segment owing to rising affluence and increasing urban population.” Expressing satisfaction with the outcome, TTSL said: “The TTSL management is very delighted with the outcome of the 3G spectrum auction, especially as we have bagged the best telecom circles from the perspective of their cumulative market potential, particularly so when we take into consideration the overall spend on these. TTSL management is heartened by the outcome of the bidding process and now hopes that the rules of the auction will not be changed mid-way.”
—Agencies