(Repeats story issued late on Friday)
* Unlisted Infotel wins spectrum in all 22 zones
* Mukesh Ambani's Reliance Ind to buy 95 pct of Infotel
* Qualcomm, Bharti, Aircel win spectrum in select zones
* Vodafone, Idea, Reliance Comm did not win any spectrum
(Recasts, adds details, comments from analysts)
By Devidutta Tripathy and Pratish Narayanan
NEW DELHI/MUMBAI, June 11 Billionaire Mukesh
Ambani's Reliance Industries (RELI.BO) made a dramatic return
to telecoms, agreeing to buy Infotel Broadband, which was the
only company to win a nationwide licence in India's broadband
wireless spectrum auction.
Infotel's offer of $2.75 billion for the license topped
forecasts while U.S. chipmaker Qualcomm (QCOM.O) and India's
biggest mobile operator, Bharti Airtel (BRTI.BO), also won
spectrum in parts of India in an auction that saw some of the
biggest players in Indian telecoms emerge empty-handed.
Soon after the winners were announced, conglomerate
Reliance Industries, India's biggest company by market
capitalisation, said it would acquire unlisted Infotel, paying
about 48 billion rupees ($1.02 billion) for fresh equity in the
firm to get a 95 percent stake.
A source with direct knowledge of the matter said Reliance
Industries would also pay New Delhi-based Infotel's spectrum
licence fee. [ID:nSGE65A0DK]
Mukesh Ambani, the world's fourth-richest man, was freed to
enter the telecom sector last month when he ended a pact with
his long-estranged brother Anil Ambani that prevented them from
competing on each other's turf. When the brothers split up the
family empire in 2005, Anil Ambani got control of Reliance
Communications (RLCM.BO), India's second-biggest mobile phone
Mukesh Ambani, who ran Reliance Comm before the split, had
been widely expected to return to the telecom market.
"Telecoms has always been Mukesh's baby, but he had to give
it up five years back," said Arun Kejriwal, strategist at
research firm KRIS.
Infotel's controlling shareholder said costly bidding had
compelled it to find a partner.
"When the bid prices started becoming high, we realised
that we need to talk to a strategic partner. So we were talking
to Reliance somewhere in between the auction. So it's not
something, which has happened in one day," Anant Nahata, who
controls Infotel, told CNBC TV18, according to a transcript on
Mukesh Ambani's return threatens to make the crowded Indian
telecoms sector even more competitive.
"Reliance's move into broadband will only result in more
jostling, as existing players will have to deal with another
large, local player with deep pockets," said Ambareesh Baliga,
vice president at Karvy Stock Broking.
Anil Ambani's Reliance ADA Group said in a statement it
welcomed Reliance Industries' entry into the broadband market
and said it was looking forward to providing services to it and
other broadband service providers.
Vodafone's (VOD.L) India unit, Reliance Communications and
Idea Cellular (IDEA.BO), three of the country's biggest
cellular operators, did not get any broadband spectrum.
Vodafone said it decided to step away from the broadband
auction as bid prices went beyond rational levels, while
debt-laden Reliance Comm, which is looking to sell an up to 26
percent stake in itself, exited the auction a week ago as bid
prices exceeded its business case estimates.
The government issued three broadband wireless licences for
all of the country's 22 zones. Beside's Infotel's full license,
two government carriers split one license and six private
sector firms -- including Qualcomm, Bharti Airtel and Aircel --
divided up the third.
Cellular market leader Bharti Airtel said the scarcity of
slots and the auction format resulted in extremely high prices.
Bharti will pay 33.14 billion rupees for the spectrum it won.
Qualcomm is paying a little more than $1 billion for the
spectrum it won in four of India's 22 zones, including the
lucrative Delhi and Mumbai zones.
Last month's third-generation (3G) spectrum auction also
saw bidding far exceed expectations. Bharti, Vodafone and
Reliance Comm paid about $7 billion in total for 3G spectrum in
that auction. [ID:nSGE64I0M6]
India's broadband and 3G spectrum sales were among the
biggest such auctions globally in recent years.
India will earn 385.4 billion rupees from selling the three
all-India broadband wireless licences and, together, revenue
from the two auctions will touch 1.06 trillion rupees, about
three times New Delhi's initial estimates.
It is a welcome windfall for the deficit-strapped
government, with some analysts saying the spectrum bonanza
could cut the country's deficit to 4.5 percent of its gross
domestic product (GDP) from a projected 5.5 percent for the
2010/2011 fiscal year.
News that Reliance Industries would acquire Infotel came
after the stock market closed but Reliance Industry shares
closed up 3 percent after speculation that the announcement
would be made.
(Additional reporting by Prashant Mehraand and C.J. Kuncheria;
editing by Unnikrishnan Nair, Tony Munroe and Karen Foster)