December 23, 2008 / 12:55 PM / 11 years ago

India upbeat on 3G auction, moves to hook foreign cos

NEW DELHI (Reuters) - India is confident the global financial crisis will not derail its auction of 3G mobile services spectrum due in mid-January, hanging out the prize of a larger foothold in the world’s fastest growing wireless market.

Sun rises over the telecommunication towers in New Delhi in this December 22, 2007 file photo. India is confident the global financial crisis will not derail its auction of 3G mobile services spectrum due in mid-January, hanging out the prize of a larger foothold in the world's fastest growing wireless market. REUTERS/B Mathur

The government hopes to raise $8.2 billion from the sale, and in a move to hook major overseas players it now plans to make new entrants winning third-generation radio waves eligible for space on the 2G spectrum as well.

“We have great hopes,” R. Ashok, member of the Telecom Commission, the apex government body for the sector, told reporters at a news conference when asked how firms were responding amid the financial gloom.

Adding potential 2G spectrum to the offer, it is hoped, will make it easier for new foreign entrants to enter an extremely price-sensitive market where most use their mobile phones for voice calls and expensive data services take time to bear fruit.

3G service enable customers to watch live mobile TV, download music and browse the Internet at high speed.

The auction will start on Jan. 16 for 20 of India’s 22 telecoms service areas or circles, and four 3G slots in most of these regions have been put on the block.

The reserve price for pan-India spectrum has been set at 20.20 billion rupees ($414 million), but bids are expected to be much higher and the telecoms minister sees the auction generating revenue of 300-400 billion rupees.

“I suppose it is quite probable that we will meet the target,” Ashok said.

Currently, telecoms firms in India offer only second-generation mobile services in a market seeing rapid growth with about 10 million new users being added every month.

International telecoms firms such as Vodafone, SingTel, Telenor, Etisalat, TM International and Maxis, which are already present in the country through partnerships with Indian firms, will be able to bid through these ventures for 3G spectrum.

T.V. Ramachandran, the head of a nine-member telecoms lobby group, described the offer of 2G radio waves for new arrivals as an “act of fairness” which would spur interest from foreign firms.

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