India Airwaves Auction Generates $9.80 Billion

   By R. Jai Krishna 
 

NEW DELHI--India generated a total of about 611.62 billion rupees ($9.79 billion) from two government airwaves auctions to wireless companies that ended Thursday.

Revenue from the auctions surpassed the initial government estimate of about 110 billion rupees. Earnings from the auction will help the government to achieve a fiscal deficit target of 4.8% of gross domestic product for the year ending in March.

Of the total, the federal government would get 182.96 billion rupees ($2.93 billion) during the current fiscal through March, while it would get the remainder in ten annual payments.

Federal telecommunications secretary M.F. Farooqui said the outcome of the airwaves auctions "is a very good indicator," both for the government and the companies.

Airwaves in the 900 MHz frequency were completely sold out, while about 80% of spectrum put on sale in the 1800 MHz was taken by operators, Mr. Farooqui said.

Companies bid in two sets of auctions, one for nationwide use of the 1800 MHz frequency and another to offer cellular-phone services using the 900 MHz frequency in Mumbai, Delhi and Kolkata.

This was the third attempt in the past 18 months by the government to auction cellphone spectrum. In the previous two auctions, the government raised only 130 billion rupees of its total estimate of 400 billion rupees. The most expensive blocs of bandwidth went unsold because operators refused to bid, saying the reserve prices were too high.

In order to ensure the latest attempt was more successful, the government lowered prices and usage charges. It also made it easier for companies the trade and share spectrum to attract more bids.

While welcoming the outcome, the wireless industry trade lobby, the Cellular Operators Association of India, warned that operators may end up taking huge loans that will hurt their profits because of high interest payments.

The lobby group said it would "urge the government to reduce the spectrum usage charges and the Universal Service Obligation Fund levy to 1% to provide some relief to the telecom companies," Mr. Mathews, who represents about a dozen companies including Vodafone and Telenor, said.

Indian wireless operators pay a three percent of their revenue as annual charges to use airwaves, and also a levy to the government for building networks in rural areas.

Write to R. Jai Krishna at [e-mail]

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