3G auction likely to attract only big players

3G auction likely to attract only big players

By SiliconIndia   |   Thursday, 27 August 2009, 07:12 Hrs
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Bangalore: According to a new report from Ovum, the global analyst and consulting company, 3G spectrum auction in India can be expected soon. Although this decision will have little impact on technology evolution, but it will have important implications on the ability of the smallest two (Aircel and Idea) of existing six private big players to participate and win spectrum.

Amit Gupta, a Principal Analyst and Author of this research said, "3G spectrum auction is unlikely to attract additional new players or entice most of the new 2G licensees to participate. However, the government's decision on the number of available 3G blocks to be auctioned will have some ramifications on the competitive landscape. If all the blocks are auctioned then the smallest two of the six probable bidders - namely Idea and Aircel might increase their chances and affordability of acquiring spectrum."

Big players in the Indian wireless industry are in immediate need of 3G spectrum to add capacity to their strained networks and to offset decline in average revenue per user (ARPU) by launching high-end value-added data services. Despite industry needs, ambiguous policies, scarcity of spectrum in the possible 3G bands and difficult political environment have delayed the auction by many years.

Most of the contentious issues blocking the auction have been resolved. But the government still has to make a decision on key issues such as the amount of spectrum to be released and the number of players allowed to participate in bidding. Gupta said, "We do not believe that 3G spectrum will attract more new players in the industry. The decision on the amount to be released is likely to have little impact on bidding strategy of the four largest players and participation from new 2G licensees. However, if the auction is limited to only three blocks of 2x5MHz spectrum, Idea and Aircel, who are among probable bidders, will find it difficult to outbid their bigger rivals."

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