India to hold another 2G auction next year

India to hold another 2G auction next year

The Indian government intends to hold another spectrum auction by March 31 after a large quantity of airwaves were left unsold in this week’s 1800MHz 2G auction, telecoms minister Kapil Sibal said today.

Spectrum in four telecom zones including Delhi and Mumbai was left unsold after the auction closed on Wednesday having raised less than a quarter of the government’s $7.3 billion target.

A separate CDMA spectrum auction was also cancelled after the only applicants for bidding Tata Teleservices and Videocon Telecommunications withdrew.

Sibal said that a panel of ministers would make the final decision on a new auction.

Regulator Trai, which set the auction’s reserve price to seven times that of the previous 2008 auction, is being blamed by politicians and industry executives for the failings of this week’s process, according to India’s Economic Times.

Sibal had told the publication in the past that Trai was basing its reserve price on that used in the countries 3G auction.

"It is very dangerous to extrapolate 2010 prices to 2012. The nature of the market in 2008 was different from that of 2010. The state of the market in 2008 and 2010 is different from that in 2012," he said.

This week’s auction was held following a decision by India’s Supreme Court in February to cancel 122 2G spectrum licences obtained in a scandal-tainted 2008 auction.

Nordic carrier Telenor, which did participate in the auction through its Telewings subsidiary following months of consideration, said yesterday that it was anticipating consolidation in the market following the expensive licensing process.

"The marketplace will rationalise itself to a great extent in the next period. You'll see more consolidation in India within circles," the company’s CFO Richard Olav Aa said during an industry conference, according to Reuters.

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