India’s 2G auction disappoints

India’s 2G auction disappoints

India’s 1800MHz spectrum auction came to a close yesterday having raised significantly less than the $7.3 billion expected by the government.

Only five operators applied to participate in the auction - Vodafone, Bharti Airtel, Idea Cellular, Videocon and Telenor - while the two applicants for CDMA airwaves withdrew before bidding started.

The 1800MHz auction raised $1.7 billion with no 1800MHz spectrum sold in four telecoms zones, including the expensive Delhi and Mumbai circles, according to preliminary results from India’s Department of Telecoms.

Telecoms minister Kapil Sibal said that unsold spectrum would be auctioned later.

Ideal Cellular acquired four blocks of 2x1.25MHz spectrum in Assam, Kolkata, Tamil Nadu, the North East, Orissa, Jammu & Kashmir, five blocks in West Bengal and one block in Bihar.

Telenor, which only confirmed its participation on the first day of the auction, won four blocks of spectrum in Uttra Pradesh West and East and four blocks in Maharashtra, Gujarat, Bihar and Andhra Pradesh.

Bharti Airtel won a single block in Assam and Videocon won four blocks Uttar Pradesh West and East, Madhya Pradesh, Haryana, Gujarat and Bihar.

Vodafone successfully bid for the highest degree of coverage with two blocks in Assam, Bihar, Haryana, Jammu & Kashmir, Madhya Pradesh, North East, Orissa, Uttar Pradesh West and West Bengal and one block in Himachal Pradesh, Kerala, Maharashtra, Punjab and Uttar Pradesh East.

Auction winners have the option of making a third of the payment upfront and the remaining balance over 12 years.

The auction came as a result of a decision by India’s Supreme Court in February to cancel all 122 2G licences awarded to eight operators in a widely criticised 2008 spectrum auction.

Analysts were not surprised by the poor showing given uncertainty from operators in the leadup to the auction over the past few months and the high base price, at seven times the amount paid by operators in 2008.

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