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Current Mobile Players Dominate India 3G Auction

The auction for 3G service licenses in India has drawn interest only from existing mobile operators in the country, according to data on applicants released by India's Department of Telecommunications (DoT) on Friday.

The 3G auction was expected to attract some foreign mobile operators who do not have a presence in India's mobile services market.

Bharti Airtel, India's largest mobile service provider, and Reliance Communications, the second largest, are among the nine who have applied to bid in the auction on April 9. Vodafone Essar, the Indian joint venture of Vodafone Group, has also applied.

Etisalat's Indian joint venture, which has licenses to roll out 2G services in India, has also applied to bid for the 3G licenses.

Friday was the last day for interested bidders to apply.

The auction for 3G has been postponed thrice since January last year.

Existing mobile service providers were expected to show interest in the 3G licenses, as they already have a large installed base of mobile subscribers to whom they can sell high-margin 3G services, said Kamlesh Bhatia, a principal research analyst at Gartner. The expenditure on infrastructure for current operators on 3G infrastructure will be incremental, he added.

New entrants into the Indian market, apart from paying the 3G license fees, would have to invest in infrastructure and in acquiring new customers, Bhatia said. Starting from scratch with 3G in India, with adoption likely to be slow, is a big risk, he added.

The mobile services market in India is overcrowded, with revenue per user falling because of a tariff war. New entrants may enter the market through acquisitions after the market enters into a phase of consolidation, Bhatia added.

Some mobile-phone operators like Bharti Airtel, Vodafone Essar and Idea Cellular also applied for permission to bid for broadband wireless access (BWA) licenses. The auction for BWA is scheduled to be held two days after the completion of the 3G auction.

Among the 11 companies that have shown interest in bidding for BWA is Qualcomm. The company said on Wednesday that it has filed an application to bid in the BWA auction, to promote the TD-LTE (Time Division Long-Term Evolution) standard. The company said it would have a local partner in line with Indian rules if it won the bid, and eventually exit the venture after setting up a TD-LTE network.

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