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India – State Expected To Raise USD 13bn In 3G Spectrum Auction.

11 March, 2015

 

Legal News & Analysis – Asia Pacific – India – TMT 

 

An auction of third-generation (3G) wireless licenses launched Wednesday in the 800 MHz, 900 MHz, 1800 MHz and 2100 MHz bands is expected to raise more than 800bn rupees (USD 13bn ) for the government of India as three of the top national carriers compete to retain existing network rights and secure additional spectrum that would enable them to deploy next-generation data services.

 

India, the world’s second-largest wireless market, is conducting the spectrum sale in accordance with a 2012 ruling that requires the government to redistribute licensed airwaves every time they expire. Among the four national carriers participating in the auction, three—Bharti Airtel, Vodafone and Idea Cellular—are considered by analysts to be facing a“do-or-die” situation as each company stands to lose significant portions of their current spectrum capacity absent an auction win. Sources indicate that Bharti Airtel, India’s top-ranked mobile operator—has six coverage areas up for auction that account for 35% of the company’s total revenue. Second-ranked Vodafone has seven circles representing 44% of the company’s revenues at risk, while Idea Cellular has a whopping 73% of its revenues at risk. Meanwhile, statistics show that fast-rising Reliance Jio Infocomm, which won rights to 1800 MHz and 2300 MHz licenses in auctions conducted last year and in 2010, submitted a USD 726m bank guarantee to the government that is the highest of any auction participant. In addition to covering 20 telecommunications “circles” and a population of 1.1 billion, the airwaves up for sale represent 300 million customers served by the carriers and half of the carriers’ combined $19 billion in annual revenues.

 

Experts anticipate a lively bidding process that will take several weeks to complete, and the government will not reveal details on bids or bidders for specific markets until the auction is concluded. Because the auction procedures are subject to pending legal challenges before India’s Supreme Court, the auction results will not be deemed final until the court issues its ruling.

 

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For further information, please contact:

 

Patrick S. Campbell, Partner, Paul Weiss

pcampbell@paulweiss.com

 

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