The price at the end of Day 18 increased c1.7% to reach a whopping $2.1 Bn for all India 3G Spectrum License. Total 3G Collection is expected to USD8.6bn. Mumbai and Delhi continue to see aggressive bidding, both closing over 4.5x the reserve price at the end of Day 18. Separately, fifteen circles including all B circles, Andhra Pradesh, Gujarat, Assam, Bihar, North East, Orissa, and Kolkata closed above our fair value estimates, whereas 14 circles ended with negative demand.

We note that final 3G auction collections could be lower than USD8.6bn, as there is a possibility that the government might not find takers for all the slots available in some circles (particularly in few C category circles). As of now, we are calculating Pan-India collections assuming that all the slots are taken up. Given the limited details, we do not have complete clarity on demand in all circles.

3G revenues appear unlikely to be material, at least in the next 12 months. However, we note that the format of consolidation will be important, and that if incremental policies allow new entrants to merge with each other, the competitive landscape may deteriorate
further. Operators winning across key markets may stand with a relatively better business case.