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India’s 3G Auction Day 2: Gujarat, Delhi Sought After; Low Demand For B & C Circles

Unlike the 2G auctions, transparency appears to be what is particularly noteworthy about India’s new 3G auctions. The Department of Telecom first published details of the ownership structures of bidders for 3G (pdf)
and broadband wireless access (pdf, over 50 mb) spectrum, and now is publishing a daily report, keeping all stakeholders and potential investors in Telecom updated on the status.

Download 3G Auction Status: 10th April 20109th April 2010

Bids have taken place over 10 clock rounds, five each on the first two days. Bidders do not have control over the pricing (it goes up in each round, according to a predetermined format), and they can either accept or reject the price set for each round by the government. The process is designed to ensure that bidders keep bidding in multiple service areas in order to win the auction, preventing anyone from waiting till the last minute to bid. What’s interesting is that bidders are told only told total demand in each service area, not who is bidding for what.

The status of the auction as of August 10th 2010:

Delhi: Rs. 3.92 billion
Mumbai, Gujarat, Karnataka: Rs. 3.77 billion
Maharashtra, Tamil Nadu: Rs. 3.81 billion

Rajashtan: Rs. 1.44 billion
Kolkata, UP (East), UP(West) : 1.42 billion
Kerala: Rs. 1.41 billion
Madhya Pradesh: Rs. 1.40 billion
Haryana: Rs. 1.37 billion
Punjab: Rs. 1.23 billion
West Bengal: Rs. 1.22 billion

Bihar: Rs. 0.31 billion
Himachal Pradesh, Orissa, Assam, North East, J&K: Rs. 0.3 billion

Some notes:

The demand for the Delhi and Gujarat service areas was excessive at the end of Day 2. While Delhi was the most expensive service area at a provisional price of Rs. 39.331 billion, and saw excess demand of 1, Gujarat saw excess demand of 2, at a provisional price of Rs. 3.773 billion. Thus, in the next round (starting todaY), Delhi will see an increase in price of Rs. 0.39 billion, while Gujarat’s price will be increased by as much at Rs. 1.88 billion, the maximum increment so far. The aggregate demand for the Mumbai and Maharashtra service areas were the same at different prices: Rs. 3.77 billion and Rs. 3.81 billion respectively.

However, these may not be indicative of future trends, since Delhi had zero excessive demand based on round 5 prices.

No demand for J&K, Assam, Orissa, Himachal, Punjab: at the end of day two (round 10); demand for these circles was weak at the end of day one as well. However, keep in mind that there are what are called ‘Activity Points’ in play, which will determine eligibility to bid in subsequent rounds. So it is expected, that while the activity requirement is low in the current rounds, as the requirement criteria increases, telecom operators might be forced to bid for some of these sectors, just to maintain eligibility for subsequent rounds. The activity requirement gradually increases towards 100% in subsequent rounds.

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