Bharti Airtel biggest spender at 3G auction

The Bharti group may have restrained itself from going all out during the wireless broadband bidding, but it is the highest spender in the two-month long auction process for 3G and BWA (broadband wireless access) that ended on Friday.

Bharti’s total outgo is Rs15,609 crore towards 3G and BWA. While it spent Rs12,295 crore on 3G spectrum, it would pay Rs3314 crore for BWA bandwidth.

Sources said Bharti had to remain low key during the BWA auction as it has just sealed a big-ticket acquisition deal with Kuwait’s Zain Telecom.

The Nahata group’s Infotel Broadband, now 95% owned by Mukesh Ambani’s Reliance Industries Ltd (RIL), would pay the next highest as bid money for BWA at Rs12,847 crore.

Vodafone, though it pulled out of the BWA race, paid Rs11,617 crore for 3G spectrum.

Aircel, a joint venture between the Apollo Hospitals group and Malaysia’s Maxis, also emerged a significant player during the 3G and BWA auction.

Aircel’s expenditure towards 3G and BWA comes to a total of Rs9,936 crore. While it bid Rs6,498 crore for 3G spectrum, it would pay another Rs3,438 crore towards BWA.

Anil Ambani group’s Reliance Communications, which too withdrew from the BWA auction, paid Rs8583 crore for 3G spectrum.

Among the other telcos, Tata Teleservices paid Rs5864 crore for 3G, and the group pulled out from the BWA race.

Idea Cellular was yet another one to have withdrawn from the wireless broadband auction, but paid Rs5,765 crore for 3G spectrum.

Following the BWA auction results, most companies spoke about the high bids and how either they had to adopt new strategies keeping in mind the price or pull out of the race completely.

Having offloaded 95% to RIL, Anant Nahata, Infotel promoter, told the media that the company planned to rope in a strategic partner after the bid prices sky-rocketed. Infotel, he said, started talking to RIL while the auction was on.

However, RIL chairman and managing director Mukesh Ambani said in a statement, “we see this as the next wave of value creation opportunity in the wireless broadband space. We believe this will pole-vault India’s economy into the digital world at an accelerated pace while creating next generation tools that will enhance productivity and create world-class consumer experiences.”

Bharti said a combination of scarcity of slots and the auction format, once again, resulted in extremely high price levels. Therefore, the company “secured BWA spectrum in select circles to experiment with new technologies for a total consideration of Rs3314.36 crore,” Bharti added.

The company has chosen four circles broadly representing four regions in India—Maharashtra in West, Karnataka in South, Punjab in North and Kolkata in East.

While welcoming the entry of RIL into the broadband space, the Anil Ambani group said in a statement that Reliance Communications pulled out of the BWA auction a week ago as the “auction prices significantly exceeded its business case estimates.” It added that RCom would focus on broadband wireless through 3G-ready pan India CDMA and maximum 13 circle 3G coverage.

Vodafone Essar, which too withdrew from BWA, also referred to the high bids. “Vodafone feels it is well positioned to offer high-speed data services to customers via its newly acquired 3G footprint and the existing 2.5G networks,” the company spokesperson said. He added, “we decided to step away from the current BWA auction when prices went beyond rational levels owing considerably to the artificial scarcity of spectrum with just two slots available and 11 bidders in the fray.”

But, sounding upbeat about the auction, Sandip Das, CEO of Maxis and director of Aircel, told DNA Money, “it is a great finale to the last two months where in the first phase we acquired 3G spectrum.” He added that “it strengthens our footprint and leadership circles.” Pointing out that the company believes in the explosive future demand for data and broadband, he stated that “it (referring to the bids) also silences all critics who doubt our commitment to the market and our customers.”

TN, Punjab BWA bids higher than 3G Wireless broadband bids for the lucrative circles of Delhi and Mumbai touched sky-high at Rs2241.02 crore and Rs2292.95 crore at the close of the auction process on Friday. This is 1300% and 1333% higher, respectively, than the reserve price of Rs160 crore set by the government for these circles. But, what is even more interesting is that two circles—Tamil Nadu and Punjab—scored better in BWA than in the case of 3G. Tamil Nadu’s highest bid at the close of BWA auction was Rs2069.45 crore, higher than the 3G bid price for the circle at Rs1464.94 crore. In Punjab, BWA bid price was Rs332.27 crore, higher than the 3G price of Rs322 crore.