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With 11 bidders, including a strong international player - Qualcomm,
the
auctions are set to exceed the government's expctations of Rs 15,000
crore, with the first day itself assuring the government of a minimum
revenue of Rs 7, 059.54 crore.
These whimsical views were thrown off on day one of bidding itself,
as the bids for a pan-India BWA licence reached Rs 2,353.18 crore, from
a reserve price of Rs 1,750 crore, assuring the government of a minimum
revenue of Rs 7,059.54 crore from the first day.
The simultaneous online auction for two slots in each of the
country's 22 service areas, saw a surge of 34 % in bids by the end of
five rounds on the first day, with Delhi and Mumbai circles
having an excess demand of six bidders each on the first day, with two
slots available in each circle. The bids in Delhi and Mumbai stood at
Rs 232.96 crore each, at a reserve price of Rs 160 crore, yet again
seemingly exceeding Communications and IT minister A.Raja's
expectations of Rs 15,000 crore in total from the BWA auction, at
a reserve price of Rs 1,750 crore for the 20 Mhz of spectrum. In fact,
there was excess demand in 12 circles, while there was negative demand
in eight circles.
Bharti Airtel, Reliance WiMax, Idea Cellular, Aircel, Augere
Mauritius, Infotel Broadband Services, Qualcomm, Spice Internet Service
Provider, Tata Communications Internet Services, Tikona Digital
Networks and Vodafone Essar are the 11 qualified bidders for the two
slots 20 MHz spectrum. Internet service providers believe that BWA
auctions might bring in close to Rs 50,000 crore for the government of
India. They say that the spectrum on auction is four times that of
20 MHz compared to the 5 MHz of 3G.With BWA and 3G, this is expected to
rise. As was the case with mobile penetration, which took a long time
to catch on, experts believe it will be the same case with BWA, and
also it will depend on the value offerings by operators.
According to Shobhit Agarwal, director, Protiviti Consulting, "With
11 bidders and only 2 slots of spectrum, the battle lines have been
more intensely defined for BWA auction as compared to 3G. There
are 6 different participants in BWA (including Qualcomm, a technology
inventor) as compared to 3G auctioneers (Bharti, Aircel, Vodafone,
Reliance, Idea). With 3G bids reaching in excess of 3X of reserve
price, it will be interesting to see, how the successful bidders of 3G
will play their part in BWA.
Further, interest levels from bidders are extremely high as India
presents the largest broadband market potential - 50% voice penetration
and a mere 1% internet & less than 1% broadband penetration.
However, one must keep in mind that it is also a very price sensitive
(both cost of device and subscription) market.Preliminary simulations
show that decent returns can be achieved with 1.5~2X of license fees if
the BWA subscriber pool touches 100 mn by year 5-6.
Also, higher BWA license fees will stress the business models of the
service providers and have a significant adverse impact on the return
numbers. One of the most important factors in this will be the
penetration of BWA services in the current subscriber base. If
history is our teacher, we must learn from how voice market exploded on
tariff rationalization and equipment drops - broadband market seems to
be on a similar inflexion point. Integrated (voice & broadband) pan
- India operators will have an advantage over others because of their
ability to provide voice + broadband on 3G/BWA and a also pan India
coverage."
BWA spectrum is necessary for rolling out
services, and can be used for WiMax as well as for
berylm@cybermedia.co.in