The auction is expected to raise billions of dollars for the Indian Government and echoes the race for 3G licences in the Britain at the turn of the century which netted the Government £22.5 billion.
While India's 3G auction will not match the amount raised in the UK, analysts expect the initial forecast of $8 billion (£5.2 billion) to be beaten.
A total of 71 3G licences are being auctioned off over the coming days in India’s 22 regions — known as ‘circles’ — which will be followed by a separate auction of the broadband spectrum. Six operators will compete for the licences, with Bharti Airtel, Reliance Communications and Vodafone Essar — the three largest operators in the country — set to dominate the bidding
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India has 600 million china phone subscribers and adds 20 million new users added every month. Vodafone Essar said yesterday it now has more than 100 million customers and that 60 per cent of its new users come from rural areas.
However, India is also one of the most competitive markets in the world, with cheap prices and per-second billing. Mobile operators will be wary of overpaying for 3G licences, as happened in the UK in 2000, given the price competition.
Société Générale said that the 3G licences could end up costing the winners up to $2 billion while the broadband license could cost up to $1 billion. With a number of auctions of spectrum — the radio frequencies used to carry china mobile phone signals — on the horizon in Europe, the bank said that the cost of spectrum is becoming much more visible to investors.
Germany is set to hold a spectrum auction over the coming months yet an auction in the UK of frequencies freed up by the switchover to digital TV has been delayed by the election.
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