Putting an exclamation point on a process that’s been plagued by delays, political wrangling, and accusations of corruption, the government of India wrapped up its month-long auction of 3G wireless spectrum with a total amount in bids that far surpassed the most optimistic projections.
A total of seven private operators put up 509.7 billion rupees, or just under $11 billion, for spectrum licenses that covered the large cities of Mumbai and New Delhi as well as smaller, more rural areas. Adding fees from state-owned providers, the total will reach $14.6 billion. The government had forecast bids of about $7.5 billion.
The auction had been delayed several times as India’s Ministry of Law and Justice said that the government could expose itself to massive financial penalties if it proceeded with the sale as planned. Originally planned for January, the auction date had already been pushed back to mid-February. One problem was that the government Department of Telecommunications doesn’t actually own the spectrum it plans to auction. India’s defense forces have long controlled the airwaves designated for sale, and it appeared the Ministry of Defense was unlikely to vacate the spectrum before mid-year.
That, however, has changed, and India’s major wireless carriers – faced with exploding demand in a country adding some 20 million new wireless subscribers a month – spent lavishly to lock up spectrum for future build-outs. While the spectrum for sale is optimized for 3G offerings, most Indian customers still use their mobile phones for voice calls and text messages only, so operators will use the additional capacity to deploy conventional services. Several winning companies now face high levels of debt as they try to survive in a highly competitive market that has seen per-minute prices plunge to below one cent.
Bharti AirTel, the subcontinent’s largest wireless carrier, bid $2.6 billion for airwaves in 13 areas, the highest total by a single company. The company remained dissatisfied with the format and the outcome, however.
“The auction format and severe spectrum shortage along with ensuing policy uncertainty drove the prices beyond reasonable levels,” the company said in a statement, according to The Times of India. “As a result, we could not achieve our objective of a pan-India 3G footprint in this round.”
