Indian Government Reaps Huge Windfall from Wireless Auction leaving Telecom Operators Bleeding Red Ink

The Indian 3G and Broadband Wireless Auctions finally ended after Two Months resulting in a Massive Windfall for Government Coffers .The combined value of both auctions is around $23 Billion which is more than double what the Government was initially expecting.Predictably it has left the Telecom Operators in the Red with the Companies having to spend much more than what they had budgeted for.The Indian Telecom Market is Hypercompetitive with 10-12 Operators fighting for a share of the the world’s fastest growing market.The earlier 3G Auctions had depleted the Telecom Operators so severely that most of them dropped out of the Broadband Wireless Auctions.Idea,Vodafone and Reliance Communications dropped out of the race , with even market leader Airtel only winning 4 out of the 22 circles on offer.The Big winners in the BWA auctions were Qualcomm,Aircel and newcomer Infotel (which has been bought over by Indian’s largest company Reliance Industries).

The Indian 3G Auction had proved to be a “Winner’s Curse” with most Companies unhappy with the amount of money they had to bid.Airtel has complained of the scarcity of slots and the extremely high price levels.It remains to be seen whether these auctions prove successful in the long run.There is the danger that the Telecom companies may not have enough capital to deploy 3G infrastructure thereby negating the huge government windfall.

India reaps billions from BWA auction, biggies stay away- Yahoo

India’s auction of spectrum for broadband wireless access (BWA) services ended Friday enriching the government by Rs.38,543.31 crore (over $8.56 billion).The 16 days and 117 rounds of auction saw many of the big telecom operators like Reliance Communications dropping out of the race as the license prices shot through the roof.The pan-India license price stood be at Rs.12,847.77 crore (over $2.85 billion) at end of the auction in which 11 companies took part, according to official data released here.

(BWA) auction prices significantly exceeded its business case estimates. We will focus on broadband wireless through 3G-ready pan India CDMA and maximum 13 circle 3G coverage,’ said a Reliance Communications spokesperson.Reliance Communications paid Rs.8,585.04 crore towards spectrum fees for 3G sevices in 13 service areas, while Idea shelled out Rs.5,768.59 crore for 11 circles.

Bharti Airtel bagged four slots — Maharashtra, Karnataka, Kolkata and Punjab for Rs.3,314.36 crore. The compay had bid for all major 3G circles earlier spending Rs.12,295.46 crore.’A combination of scarcity of slots and the auction format, once again, resulted in extremely high price levels. The Company has secured BWA spectrum in select circles to experiment with new technologies for a total consideration of Rs.3,314.36 crore,’ said a Bharti statement.

BWA spectrum is essential for rolling out Worldwide Interoperability for Microwave Access (WiMAX) services enabling hand-held devices and laptops to access the Internet.