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India poised for 3G auction in December

14 сентября 2009

India’s auction of third-generation telecommunications services will go ahead in early December, more than a year after it was originally planned, the government said on Sunday.

The Department of Telecommunications at the weekend invited companies wishing to participate in the auction on December 7 to notify it by mid-November.

The declaration of an auction date comes after a ministerial panel almost doubled the reserve price for pan-India 3G spectrum to Rs35bn ($722m) from Rs20.2bn. The DoT hopes to net at least $5bn from the auction. There is pressure to launch the auction to bring in revenues to help close the largest fiscal deficit for nearly two decades.

The reserve price has risen steadily in spite of the global economic downturn. India’s independent telecoms regulator had initially recommended a floor price of $250m for a 3G licence.

Some analysts believe the government has been too ambitious in hiking the floor price at a time when the world economy is facing recession and companies are struggling to raise capital. They have also questioned how big the Indian market for 3G mobile phone services will be, when much of the current growth is sustained by voice services. 3G give users improved access to the internet and allow them to download music, videos and other value-added services.

The auction of pan-India 3G spectrum licences had been planned for January this year but the global financial crisis and India’s parliamentary election had held up the sale. New Delhi had initially said a sale would be ready by the end of last year.

The government, however, had sensed that bids could be much higher in one of the fastest growing telecommunications markets in the world once the worst of the downturn had passed. Access to the market in India's main cities, particularly Delhi and Mumbai, the financial centre, are particularly attractive.

India's mobile telephone networks add more than 10m users a month, using inventive pricing policies that offer mobile services for as little as one rupee a minute.

Companies, such as Bharti Airtel and Vodafone have reported no let-up in the pace of growth in spite of the effects of the global financial crisis on Indian consumer sentiment.

Details of the 3G auction were first released in August last year.

Stumbling blocks included the advantage incumbent operators had over new entrants and the terms under which international companies had to form joint ventures with local partners.

Some local telecoms executives have warned that Asia’s third largest economy cannot afford to delay the launch of 3G services. They have criticised the government for allowing India to trail other fast-growing telecommunications markets.

But other international telecoms groups had asked for delays in the auction, saying the adverse global financial conditions hindered their ability to meet high roll-out costs of new services.


Источник: Financial Times

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