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India 2G auction gets bad reception

India government raises US$1.7 billion from its auction of 2G mobile spectrum, but it falls well short of the US$7.3 billion target.
Written by Liau Yun Qing, Contributor

The India government's 2G spectrum auction has fallen short of its targeted INR 400 billion (US$7.3 billion) mark, leading an analyst to say the auction was a "big embarrassment" for the government.

Reuters reported Thursday the Indian government raised INR 94 billion (US$1.7 billion) from the sale of 1800 megahertz (MHz) airwaves after the auction closed on Tuesday. India's Telecommunications Minister Kapil Sibal added that four zones, including Delhi and Mumbai, drew no bids but the unsold airwaves will be auctioned again at a later date.

Norwegian operator Telenor, for one, secured 5MHz of bandwidth in six telecom zones, which allowed it to retain part of its operations, the report noted. A separate report by CNBC's Moneycontrol.com Thursday said the company's total bid came up to US$7.3 billion, but it did not get licenses in Mumbai, Kolkata and West Bengal.

Vodafone India also successfully acquired licenses in 14 telecom zones to expand its 2G coverage. "Our decision to participate in the 2G auction was to secure additional spectrum in many circles where we have not received any new 2G spectrum since 2008. Our customers grew in that period from 60 million to 153 million today," Vodafone India said in the report.

In response to the low auction revenues, Prashant Singhal, telecom industry leader at Ernst and Young India, told Reuters: "All in all, a big embarrassment for the Indian government, but one could see it coming."

The current 2G spectrum auction was the result of a court ruling in February which decided the government had erred in issuing the 2G licenses on a first-come-first-served basis in 2008. The government then revoked all 122 license agreements issued then and put them up for auction again.

Operators with airwave licenses won in the previous auction will be able to operate only until Jan. 18, 2013.



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