16 thoughts on “Indian 4G Wireless Auction Brings in $5.5B”

  1. Om,
    I am not sure why WiMax is preferred by folks instead of LTE. I think the reason could be that the equipment is cheaper and mature compared to LTE. Wimax if deployed quicker can satisfy the broadband needs of many consumers. Your take an the Ambani brothers is interesting. I believe you might have unearthed something there. These two brothers need to talk with each other and get over the fight.

  2. Om: MediaNama had highlighted the fact that Infotel is the only entity to have pan-India spectrum in the auctions (whether 3G or BWA) – http://bit.ly/abm25Z

    About the Ambani brothers, there’s some history to take into account there. Mukesh Ambani couldn’t enter the telecom arena because of a non-compete agreement with Anil Ambani. The non-compete agreements were re-negotiated a last month (http://bit.ly/9QeR0j) to exclude most sectors, including Telecom, so the entry on Reliance Industries into Telecom was anticipated. I doubt there would have been complacency from Anil Ambani’s side – it’s long been rumored that another bidder – Tikona Digital – was backed by Mukesh Ambani. Anil Ambani’s Reliance Communications (RCOM) is rather strapped for cash right now, having already paid around $1.83 Bn for 3G spectrum. They’re looking to raise money by selling up to 26% stake.

    An interesting development since the announcement of the results is that RCOM has made overtures to the BWA Auction winners (especially RIL) about using RCOM infrastructure, probably for backhaul. Appears to be a thaw in that relationship, given that they’ll have to work together in the natural gas sector.

    On Qualcomm, they’ll have to sign up an Indian partner soon because there’s a 74% cap on foreign ownership in telecom operators in India. So 26% is up for grabs, and perhaps an operator like Tata Indicom, which didn’t win anything in this auction, will come on board.

    1. Nikhil

      Thanks for the comment. I have been keeping up with the developments. I have been amazed at the speed with which the deal was announced. Which tells me

      1. Infotel knew the outcome.
      2. Mukesh’s group was all set with an offer and ready to go.

      The coincidence is pretty amazing.

      And even if there has been thawing of relations, I bet you Anil’s group would have been aggressive about bidding for this spectrum had they been aware of the deal. Just adding two and two together 😉

      1. yeah, I agree: the speed with which it was announced did surprise everyone, though I don’t think it would have affected ADA’s bid. ET had reported this deal before the auction ended, so it would have been in discussions. Like I said, Tikona was bidding as well. The people rumored to be behind Infotel (HFCL promoter Nahata) has a history of acquiring spectrum and then selling stake. Nahata owned Jumbo Techno Services had acquired 2G spectrum in 2008, and then sold most of the stake in the company (64% if I remember correctly) to Videocon.

      2. Hi Om,
        Ask anyone who has worked with Mukesh. It was really hard on him to let RCom go to Anil. We had seen him and the team working till 3-4 AM almost everyday for years to built the company at an awesome speed and class.
        He always wanted to return to communications and this acquisition is no surprise. Two years back, if the market and oil prices wouldn’t have crashed, you might have heard a big news at time itself.
        If you look at some of the quick events that happened in last few weeks, this entry is not surprising.

        Moreover, this whole thing (acquisition) is just a front end. It is too obvious for people in communication business in India to understand Infotel (who?) to win pan India license for BWA at such a price and Reliance buying then within a few days of non competence agreement ending between two brothers.
        I always wished the war between two brothers to end ASAP. They can give Indian consumers so many things that they are deprived of today. (remember the price of making mobile call before Reliance entered the market?)

        Best wishes to Mukesh! and now to Anil as well! 🙂

      1. The results announced by the Department of Telecom on their website are for private telecom operators only, amounting to Rs. 256.95 billion, approx $5.49 billion.

        One additional slot of spectrum per circle has been reserved for the BSNL-MTNL combine (government owned telecom operators), so that takes the total money raised from the auction to Rs. 385.43 billion – approx $8.24 billion.

    1. $5.56 billion is the money collected from the auction from Bharti, Augere, Tikona, Qualcomm, Aircel and Infotel.

      BSNL+MTNL, the state operators, were given the spectrum outside the auction. They will be paying the amount for all 22 circles which will be $2.74 billion.

      That total money Indian government will get from the BWA auction is $8.2 billion(5.56+2.74) which is what WSJ is referring to.

      Read more here – http://bit.ly/9wwd1u

  3. This just shows how bad for business government spectrum auctions are. It is corrupt on the face of it- can you imagine the government auctioning the right to sell computers or offer maid services for a region? The government cronies make billions, and the possibility of genuine competition is reduced, if not eliminated.

    More importantly, Billions of dollars that could go into making quality communications network infrastructure are diverted to, quite literally, pay off corrupt thugs who will use violence if you don’t follow their edicts.

    Mobsters everywhere only dream of being able to run scams like this.

    And we all suffer.

    So, please, don’t write about it as if it is legitimate, as if it is an aspect of the nature of business.

    It is destructive, and it is holding back the advancement of humans everywhere.

  4. Mukesh, the world’s fourth-richest man, is likely to start a wireless broadband pricing war, which could have a detrimental impact on other carriers that have spent billions buying 3G spectrum licenses.

    Th last time he did that was when reliance entered mobile telephony , which forced all carriers to bring down the cost of calls and thus made the cellphone a possibility for a huge number of Indians, thereby increasing the subscriber base for everyone.

  5. Qualcomm has succeeded in bringing lot of debate around LTE and has really raised the question – WHYMAX.
    But is it worthwhile for the Indian Operators to wait for LTE to mature and be affordable ?
    Is there a way to start with WiMax and then EVOLVE in the LONG TERM !!!

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