3G auction update

All the nine players who had applied for participating in 3G spectrum auction, have been cleared for the financial bidding, making the competition for bagging for 3-4 slots on offer pretty intense. According a DoT notice, Bharti Airtel, Reliance Telecom, Vodafone Essar, Etisalat DB, Idea Cellular, Stel, Tata Teleservices, Aircel and Videocon are the operators who are in the fray.In another 10 days, nine companies will be neck-and-neck in the bidding ring for the precious 3G spectrum valued at between Rs 30,000 crore and Rs 40,000 crore.Six of them — Bharti Airtel, Reliance Communications, Vodafone Essar, Tata Teleservices, Idea Cellular and Aircel — will bid for all 22 telecom zones in the country. The remaining three — Etisalat India telecoms venture, Videocon Telecommunications and S Tel — will bid for 3G spectrum in selective zones. While the competition for bagging the 3-4 slots on offer is expected to be intense, if past record is any indication, Bharti and Vodafone could be the frontrunners as they possess resources, a national network and a voracious appetite for winning bids.Tatas and Idea are also strong contenders, supported by funding ability and a critical requirement to remain in top four, though past success is not a plus. Bharti has been perhaps the savviest bidder across all the telecom spectrum auctions held in India so far. In 1993-94 it won Delhi in a beauty contest and Himachal Pradesh in 1995. Bharti cleverly expanded through M&A’s between 1995 and 2000. In 2001, Bharti picked up eight 2G mobile licences at a bargain price of Rs 690.67 crore. This was the maximum number of licences won by any company during any auction and helped Bharti to become India’s first pan-India operator. Vodafone beat several global rivals to buy 67% of Hutchison Essar in 2006-07 for $12 billion, which is an excellent price in hindsight. It won all of eight 3G auctions held between 2000-07 and additionally bagged 3G licences in ten beauty contests in other countries during the same period. The Tatas have a mixed track record in winning mobile auctions. In 1995, it won Andhra Pradesh but stayed away from the fourth mobile licence bidding in 2001 preferring the limited mobility route. However, Tatas did beat stiff competition to win VSNL in a bid against Reliance in 2002. Its recent partnership with NTT Docomo — a pioneer in 3G/data services — could add value to its 3G bidding strategy and funding capabilities. Idea, (then Birla AT&T) is in the same boat, having picked up Gujarat and Maharashtra in the 1995 auctions and Delhi in 2001. Idea bought out several properties from RPG and Escorts to reach its current status. Its strategy shows the ability to bid aggressively but only in key markets and follow the M&A route for others. Reliance has a feeble record in winning auctions but boasts of a formidable war chest. In 1995, it won seven circles mostly C category by paying roughly Rs 56 crore. At that time, this strategy was considered a failure. However, today, C category circles are demonstrating maximum growth potential. Finally, Etisalat and Aircel could emerge to be dark horses.