India is one of the fastest growing nations around the world and it shouldn’t be surprising if the costs of doing
business there come at a steep price, but how high should the price be before it grabs your attention? Does $14.5 billion dollars and counting sound interesting? We had reported earlier that India has more than 584 million cell phone subscribers and growing.
The Indian governement reported that hte revenue generated from the sale of third-generation (3G) airwaves on Monday crossed the Rs 65,000 crore ($ 14.2 billion) mark while the nationwide licence price reached over Rs 16,000 crore ($ 3.5 billion). This was reached at the end of the 176 rounds of an auction to award the spectrum for telecom services to operate in 22 zones. This will let the telecom giants operate and offer 3G services beginning from september 1st on a commercial basis.
The auction which began on April 9th has been going on since then. The governement had set a reserve price of Rs. 3,500 crore ($800 million) and the current price is 361 percent higher than the reserve price.
The governement, with some aggressive bidding is poised to raise more than Rs. 70,000 crore ($20 billion) from the 3G auction alone.
The 3G slots are available in each of the 22 circles into which the country has been geographically divided for the 3G services, which will facilitate faster connectivity and enable applications such as Internet TV, video-on-demand, audio-video calls and high-speed data exchange.
Nine telecom companies – Bharti Airtel, Reliance Communications, Vodafone Essar, Idea Cellular, Tata Teleservices, Aircel, Etisalat, S Tel and Videocon Telecommunications are competing and the auction will end only when the demand is equal to the number of slots available.
While this is on, the governement has already let Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) – the once governement owned national telecom – the spectrum for 3G services but they have to pay the same license fee that would be levied on a private telecom firm.
The auction is being conducted on a secure website and at each round the price is being raised by about 10 percent.
The bid data and the winning companie’s names will be made public only after the auction is complete and after the approval by the governement. The winning firm will have to deposit the money with in 10 days after the auction and will be able to offer commerical services from September 1st.
With about 584 million cell phone subscribers and growing, the phone companies will not have any problem recovering this cost.