12 March 2014

India concluded a fiercely contested auction which will earn the government over 7 billion €, beating most observers’ and the government’s own expectations.

The winning companies need to pay a quarter to a third of the winning price initially and the rest up to 2026. India had traditionally sold airwaves for basic mobile services through a state-selection process, but switched to an open auction in 2012 to increase the efficiency and openness of the process.

After initial technology restrictions were removed, the 900 and 1800 spectrum bands sold in the auction can be used to offer 3G and 4G services, respectively. Currently carriers offer voice services on these bands, but companies said they could use these now to rollout mobile data services. Companies have the right to use the airwaves won in the auction for 20 years.

No.1 Bharti Airtel and second-ranked Vodafone won airwaves in the premium 900 megahertz band that was available in three key cities -- Delhi, Mumbai and Kolkata. Conglomerate Reliance Industries, a new entrant in telecoms that is seen as a threat to the incumbents, bought airwaves in the other band in 14 locations. Reliance Industries already owns nationwide 4G airwaves from the 2010 auction but has yet to launch services. The latest 1800 band spectrum purchase would help it improve 4G coverage. 

The market leaders' large investment in strengthening their data footprint underscores the increasing competition in the marketplace and their bet on mobile data in the world's second biggest mobile phone market behind China.

by Claudio Murri

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