3G Auction finally came to an end yesterday and the Indian government is rejoicing heavily. And there is a good reason for that. Indian government expected to rope in around 35,000 crores through 3G Auction and ended up with a bounty of 67,719 Crores (Whopping 15 billion dollars!). 3G Auction lasted for 34 days and 9 telecom players bid for 22 circles.
Bharti Airtel and Reliance Communications, India's top two mobile operators won 13 of the 22 telecom circles. Vodafone won 9 circles, Idea Cellular won 11 circles and Tata Won 9 circles. The top two lucrative circles such as Delhi and Mumbai - where the mobile customer base is high and the revenue potential is high - was won by Bharti Airtel, Vodafone and Reliance.
Telecom Minister A Raja was seen happy with the results, "The figures were far beyond our expectations and I am happy for that", he said. Finance Minister, Pranab Mukherjee was jubilient, "It is good. It will give me that much more elbow room", he said. The Government can now hope to reduce the fiscal deficit even more. The expected revenue from 3G Auction is almost double of the original estimation of 35,000 crores!
The Spectrum would be released to the winners by september and Indian customers can finally expect 3G services such as video calling and high speed Mobile Internet access by the year end or early next year. The Bidding for Broadband wireless access (BWA) or WiMax spectrum is yet to begin. The bidding results for 3G has set the stage for BWA. Indian government can expect another 70,000 crores from BWA, as BWA is rated much more highly by the operators.
The investor community and the Stock exchange is not overly buoyed by the 3G results. "The 3G Auction is no great deal for the companies or investors and consumers. The telecom industry today is an overcrowded space with no clear stance on the policy. Corporates do not have the power to fix prices because of multiplicity of operators and as a result the return on equity is dropping. The overall structure of the industry is a concern", said Satish Ramanatha, Head - BNP Paribas Asset management. The Telecom sector which has been the darling of Equity market has been worst hit in the past few weeks with Bharti, Idea and reliance losing 30-35% of market capitalization collectively!
With Mobile operators having won the bids, they now have a huge task of managing debts and payments. Indian consumers can only expect insane prices for 3G services initially. Lets see how it unfolds!
Provisional Results of Indian 3G Auction
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