Likely 3G Bids by Indian Operators

3G auctions in April; notices inviting bids just before the budget speech. Government plans [not firm] to complete 3G auctions by mid-April; three slots in 17 circles and four slots in five circles to be auctioned. We do not rule out further delays in 3G spectrum auctions.

How are the Bids Likely to be – We expect Bharti and Vodafone to bid for pan India 3G auctions; Tata Teleservices, Reliance Communications and Idea Cellular should be selective. MTS, Uninor, Datacom and Aircel are unlikely to be aggressive and may attempt selective participation in key urban centres. Given the fragmentation of the Indian wireless space, we do not expect entry of new foreign players via the 3G auction route.

Restricting three slots for 3G spectrum will allow 3G winners to provide differentiated data services in a voice-centric market. While the entire controversy on the spectrum availability of 3G spectrum suggests that incremental 3G slots are unlikely before the next 12-18 months, release of additional 3G spectrum may disrupt the early mover advantage of initial winners.

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