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3G auction 2010 -Updates
Day 2: 3G auction closes at Rs 4,085cr

NEW DELHI: The second day of bidding by nine telecom operators for three slots of pan-India 3G spectrum saw a closing price of Rs 4,085 crore for all circles, up from Rs 3,980 crore on Friday. The auction opened at a reserve price of Rs 3,500 crore.

The percentage increase on Saturday was just 2.63% compared to the 13.71% jump in the price on the first day of bidding.

This translates to total earnings of Rs 16,677 crore from four pan-India 3G operators, up from Rs 15,920 crore on Friday. The fourth operator is BSNL/MTNL, which is not participating in the bid but will pay market price for allocated spectrum as determined through these auctions.

The exercise is expected to raise over Rs 30,000 crore for government and will bring in four to five players into 3G, ensuring adequate competition. For mobile users, 3G will bring in added features like high-speed internet, video, television and other next-generation services.

The Gujarat circle saw maximum demand, triggering a Rs 18.86 crore price increment over the closing price of Rs 377.36 crore for the circle. This means bids will open at Rs 396.22 crore for Gujarat on Monday.

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3G bids inch up on second day of auction

NEW DELHI: Bids rose on the second day of India's multi-billion dollar third-generation (3G) auction, with one provisional winning bid for national cover touching 40.85 billion rupees ($922 million), or about a 17 percent premium to the base price, government data showed.

A total of 10 rounds of bidding had been completed by Saturday, India's Department of Telecommunications said on its website, without disclosing which company had bid how much.

The widely-watched auction started on Friday and the multiple-round bidding process is expected to take about two weeks to complete, officials have said.

On the first day, bids were at about a 12 percent premium to the base price of 35 billion rupees for all-India spectrum.

There is no bidding on Sunday. The auction resumes on Monday.

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Stakes high for telecom trio in 3G auction

New Delhi, April 11: Bharti Airtel, Vodafone Essar and Reliance Communications are likely to bid aggressively for pan-India 3G spectrum given their huge demand for this scarce resource.

Each of them has to accommodate over 100 million subscribers in their networks at a time the government is not allocating any additional 2G spectrum.

“Other players such as Idea Cellular, Tata Teleservices and Aircel will only bid in circles where they have an established 2G market,” analysts said.

Idea and Tata Teleservices may not be interested in Assam, the Northeast and Jammu & Kashmir, and Aircel is likely to stay away from major circles such as Calcutta, Mumbai, Delhi, Maharashtra, Gujarat, Andhra Pradesh and Karnataka.

“Most of the 3G spectrum will be utilised to augment existing capacity to carry voice traffic. After the launch of GSM services by Tata Tele and R-Com, networks are rapidly reaching capacity limits, particularly for Bharti, Vodafone and Idea,” Shubham Majumdar and Kisalaya Singh, telecom analysts at Macquire Group, said in a report.

In 17 circles, including Calcutta, Delhi and Mumbai, three 3G slots are being auctioned, while in the rest, four slots are available.

The government is auctioning 5 megahertz (MHz) of 3G spectrum in each circle. While the spectrum will be allocated in October, the rollout of data services will take another 3-6 months, even in the metros.

On an average, non-voice services comprise only 9-10 per cent of the revenues of domestic operators.

“We will invest heavily in buying 3G spectrum, so it makes more business sense to direct it in areas like voice where it can start generating revenues immediately,” said an executive of a top telecom firm.

Though the Tatas, Idea and Aircel have — like Airtel, R-Com and Vodafone — applied to bid for pan-India spectrum, it is not binding on them to buy spectrum for all circles.

Besides these six, three more are in the fray — Videocon Telecom, S Tel and Etisalat DB Telecom— which have bid for select circles.

At present, all mobile services in India are offered through 2G airwaves. Allocations of 2G spectrum beyond the start-up 4.4 MHz were stopped in March 2009.

The government is awaiting recommendations of the Telecom Regulatory Authority of India (Trai) on the issue. Trai was supposed to submit its report last month.

“The launch of high-speed services will help to decongest mobile services networks, especially in metros and urban areas,” Naveen Mishra, lead analyst (telecom research) at IDC India, said.

3G services, seen as the next growth driver for Indian telecom sector, allow users to surf the Internet or download content, including music and video, at speeds faster than current technologies.

“The allocation of 3G spectrum will also help telecom firms to launch data services and open up revenue streams,” Mishra said.

3G services were originally due for launch in India in 2007 but had repeatedly been deferred amid troubles over vacating airwaves and setting bid prices.

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Bids high but 3G tariffs won't rise

NEW DELHI: Consumers of mobile services need not watch the steady price escalation of bids for 3G spectrum with anxiety, fearing that they will eventually have to bear the price burden when 3G services are launched. Competitive market forces indicate that the price of 3G services which offer rich voice, high speed data and video, is likely to be at par with prevailing 2G tariffs for voice and SMS.

The government’s revenue target from the 3G auctions exceeds Rs 30,000 crore. Telecom minister A Raja has said even Rs 50,000 crore of revenues is not out of reach. “Since these are probably the last spectrum auctions to be held in this decade, revenue maximization is a clear government objective, especially since the costs cannot be passed on to consumers”, a senior DoT official who is overseeing the auction process, told TOI.

Telcos have enormous incentive to argue that ‘expensive auctions lead to price increase’ as they obtain windfall profits if they can bag a scarce resource at a lower price.

According to experts, the competitive environment, coupled with the fact that voice still constitutes 92% of telecom revenues and SMS just 3% to 4%, makes any case for higher consumer prices for 3G implausible.

There is high probability that 3G will be used mostly for voice and for a long period of time. Other applications like video content, Bollywood, sports and Internet access will be restricted to a handful of large cities and metros between 2011 and 2014.

Since 3G will be mainly used for voice, it is impossible for operators to charge a premium on voice or SMS using 3G. “If operators launch 3G services at high prices, they will be saddled with empty networks. It is in their own interest to promote usage through lower prices. This will compensate users for higher 3G handsets costs”, says Kunal Bajaj, director, Analysys Mason.

“Like any other business, 3G winners will charge the price that maximizes their profit and enhances the market in the future, independently of what the spectrum costs them in the current round of auctions”, he adds.

“Since 3G licences are valid till 2030, companies will recoup value over this entire period rather than instantly. Imagine a scenario in 2020 where new mobile services are being sold at high prices that allow companies to maximize their profits. If the government were to suddenly refund all fees, would the prices be lowered? The answer is no. They would remain exactly the same because companies would be irrational to lower their prices below what the market can bear. The refund will only help boost profits”, said another telecom expert.

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India concludes 16th round of auctions for 3G spectrum

India Monday concluded 16 rounds of auctions to award radio frequency spectrum for third generation telecom services in the country, with a provisional winning price of Rs.4,324.19 crore for a single nation-wide licence.

Slots for between three and four players are available in each of the 22 circles into which the country has been geographically divided for these services which will facilitate much faster data, voice and video communications.

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 will pay the same licence fee as would be levied on private players after the auction.

Along with the fee that will be eventually paid by the two state-run enterprises for the licences, the government will provisionally get Rs.17,635.52 crore ($3.91 billion) from the auction, which, so far, is well below the projected earning of Rs.30,000 crore.

This is on the presumption that every available slot gets filled at the provisionally approved price.

The Delhi circle continued to attract the highest price of 416.43 crore, even as one additional player was still in the fray for the three available slots. Gujarat was next with Rs.416.42 crore, with two additional players left in the fray.

Assam, Jammu and Kashmir, Orissa and West Bengal could not attract a single player.

Nine telecom companies are participating in the online auction process - Bharti Airtel, Reliance Communications, Vodafone Essar, Idea Cellular, Tata Teleservices, Aircel, Etisalat, S Tel and Videocon Telecommunications.

A reserve price of Rs.3,500 crore has been fixed for a pan-India spectrum. It is a simultaneous auction of 22 circles over a secure website. At each round, the price is hiked from between 10-1 percent based on demand.

The auction is being held from 9 a.m. to 7.30 p.m. on all days, except Sundays and national holidays. The process will end only when the demand is equal to the number of slots available in each circle.

According to a senior DoT official, it is difficult to set a time-frame for the 3G bidding. 'It may take two weeks, or may stretch for a month also,' the official said.

The bid data, including the winning companies' names, will be made public after the auction's completion and approval by the government. The winning firms will have to deposit the money within 10 days after the auction.

The successful bidders would be allowed to offer 3G services on a commercial basis from Sep 1.

The 3G services will allow faster connectivity than what is available now and enable applications such as Internet TV, video-on-demand, audio-video calls and high-speed data exchange.

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Gujarat tops in 3G bid price on Day 4

New Delhi: Gujarat beat Delhi on the fourth day of the 3G (third generation) telecom spectrum auction, with a provisional winning price of Rs 459.52 crore.

Delhi, which has been on top ever since the auction took off, had to be content with the second position at a winning price of Rs 437.65 crore, after 22 rounds of bidding on Tuesday.

Reserve price, set by the government, for metros (except Kolkata) and A circle is Rs 320 crore each.

The maximum pan-India bid price on Tuesday touched Rs 4,582.52 crore, which is 30.9% higher than the reserve price of Rs 3,500 crore, and 5.9% more than the previous highest mark of Rs 4,324.19 crore.

Going by the trend, industry sources said that the 3G auction would continue for at least another week, which would then be followed by the broadband wireless access (BWA) bidding.
The total time taken for 3G and BWA auction could be more than a month.

While Delhi was pushed to the second position by Gujarat, Mumbai continued to be on the last spot in A circle for the second consecutive day.

At the close of play on Tuesday, Mumbai equaled Delhi’s winning price of the previous day at Rs 416.78 crore.

After Gujarat and Delhi were Tamil Nadu (Rs 429.39 crore), Maharashtra (Rs 425.14 crore), Andhra Pradesh (Rs 425.14 crore), Karnataka (Rs 420.94 crore) and Mumbai (Rs 416.78 crore), among the A circle regions.

‘B’ circle also witnessed an upset on Tuesday with Uttar Pradesh (East) pushing Rajasthan to the second spot on Tuesday.
UP East’s provisional winning price was Rs 182.24 crore, against Rajasthan’s Rs 174.22 crore.

West Bengal remained at the lowest rank in B circle with a winning bid price of Rs 123.63 crore, the same as on Monday. Punjab, which had tied with West Bengal at the lowest spot, rose one level on Tuesday at Rs 126.10 crore.

The reserve price for B circle was fixed at Rs 120 crore each.
In C circle, there’s hardly any variation between states. Bihar continues on top at Rs 32.44 crore, while all the rest are at Rs 30 crore each, which is the reserve price in C circle.

The government is targeting to raise Rs 35,000 crore from 3G and BWA auction.

The reserve price set by the government for pan-India 3G spectrum is Rs 3,500 crore for an operator and Rs 1,750 crore for BWA.

The auction process would close once all the circles achieve equilibrium, which is the number of slots available equal the number of bidders.

3G auction would facilitate high-speed mobile services in the country. It is a simultaneous auction of 22 service areas over a secure website.

The auction has multiple rounds, and it could be spread over several weeks.

Bharti Airtel, Reliance Communications, Vodafone Essar, Idea Cellular, Tata Teleservices and Aircel are bidding for all-India 3G spectrum. Etisalat, S Tel and Videocon Telecommunications are bidding only for some circles.

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3G: Gujarat tops bids, 31% hike in All-India base price

NEW DELHI: After the end of fourth day of the 3G Auction, the All-India price was at Rs 45.82 billion, 31 per cent up from the base price of Rs 35 billion.

Gujarat received the highest bid after a total of 22 clock rounds were completed. Delhi, however, continued to dominate the auction among cities with the price rising to Rs 4.38 billion.

The price for Mumbai service area rose to Rs 4.17 billion, while the price of the rest of Maharashtra was Rs 4.25 billion.

The bid for Tamil Nadu rose to Rs 4.29 billion, while that of Andhra Pradesh clocked Rs 4.25 billion. Kolkata received a bid of just Rs 1.58 billion, dropping from the bid of Rs 1.59 billion at the start of the day.

While eastern Uttar Pradesh received a bid of Rs 1.82 billion, the bid for western Uttar Pradesh was Rs 1.59 billion. Rajasthan received the next highest bid of Rs 1.74 billion.

The bids for Assam, Orissa and Jammu & Kashmir service areas remained at Rs 300 million each, with the north-east getting a bid of Rs 303 million.

The auction, which will resume on Thursday as Wednesday is a local holiday, may take about two weeks to complete.

The telecom operators in the race are Aircel, Bharti Airtel, Etisalat DB Telecom, Idea Cellular, Reliance, S Tel, Tata Teleservices, Videocon Telecommunications and Vodafone Essar.

The successful bidders would be allowed to start commercial 3G operations from 1 September.

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3G: provisional winning price touches Rs. 4,831 cr

The provisional winning price for 3G spectrum on Thursday touched Rs. 4,831 crore as all top telecom companies mainly focus on seven high-value telecom circles, while the auction price on Tuesday stood at Rs. 4,582 crore.

Interestingly, after completion of 28 rounds, bidding remained aggressive for seven circles — Delhi, Mumbai, Maharashtra, Gujarat, Andhra Pradesh, Karnataka and Tamil Nadu — which saw provisional winning price remaining over Rs. 440 crore for each circle, with Gujarat retaining the first position at Rs. 487.76 crore.

While for the remaining 15 circles, bidders did not even cross Rs. 200 crore, with telecom companies showing no interest in five telecom circles — Punjab, West Bengal, Orissa, Assam and Jammu and Kashmir.

So far, the provisional winning price has been increasing gradually since the e-auction started.

While it was Rs. 3,913 crore on the opening day (April 9), it rose to Rs. 4,085 crore on April 10, to Rs. 4,324 crore on April 12 and to Rs. 4,582 on April 13, against the Department of Telecommunications reserve price of Rs. 3,500 crore for pan-India licence.
The Hindu
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