On 19 May, India’s 3G auctions concluded after 34 days with more than $15 billion in revenues for the Indian government – nearly double the goal set for both the 3G and BWA auctions combined.The 3G auction was for three to four slots of 2x5MHz spectrum in the 2.1GHz band. There were several successful bidders, with no single operator winning a pan-India license. In our view, the results are fairly balanced, with successful bidders relatively satisfied with the outcome.
Two major factors have contributed to the fact that no operator has won a pan-India license. The first was the structure of the auction itself. The simultaneous ascending bidding over multiple clock rounds combined with circle-level bids meant that individual bidders could adopt a zonal (as opposed to a pan-India) strategy.
Second, as the intense bidding pushed prices steadily higher, most operators were forced to abandon pan-India dreams and make some hard choices. The end result is that India will have as many as six significant 3G players, in addition to the state-owned BSNL/MTNL, with fragmented coverage maps.
The aggressive bidding reflects the view by many bidders that they simply had no choice but to participate or risk being left behind. Most bidders appear to be relatively satisfied with their outcomes under the circumstances. Unsurprisingly, the most aggressive bidders were Bharti and Vodafone, with total bids of $2.7 billion and $2.6 billion for 13 and nine circles respectively.
Bharti and Vodafone have won the prized circles of Delhi and Mumbai, and will be satisfied that they have protected their premium subscriber bases and heavy legacy investments. The other metro winner, Reliance, has ensured that it now has the ability to target premium, high-value subscribers. Beyond these metro circles, the picture is a mixed bag, with circles dispersed among all the winning bidders. The biggest surprise of the auction was the strong showing of Idea and Aircel.