Few takers for India's auction of mobile spectrum

Earlier investors such as Sistema and Etisalat stayed away from the auction

India's auction of mobile spectrum has not attracted new foreign investors, reflecting growing uncertainty about investment policies in the country and the growth potential of its mobile market.

Telenor and the Indian joint venture of NTT DoCoMo, which both lost 2G licenses as a result of a Supreme Court decision in February, are participating in the bidding for new licenses.

But the Indian joint venture of Russia's Sistema said it would stay away from the auction, and instead try to recover in court the licenses it lost. The recommended spectrum prices also make the business case unviable, Sistema Shyam TeleServices said in a statement. Etisalat, another company that lost its licenses, was also not a participant by Friday, the last day for applications.

The Supreme Court ordered 122 licenses canceled in February, and the spectrum thus freed to be auctioned again, after it ruled that the allocation of licenses in 2008 had been manipulated by business interests. The Indian joint ventures of foreign companies such as Etisalat, NTT DoCoMo, Telenor, and Sistema lost licenses as a result. Some of these foreign companies had invested in Indian mobile startups that had bagged the licenses.

The lukewarm response to the auction can be put down to investors' concerns after the country's flip-flops on investment policy in a number of areas, as well as the saturation of the Indian mobile market, said Kamlesh Bhatia, research director at Gartner.

At this point only companies that have the ability to differentiate significantly and add value in the mobile services business will invest in the country, Bhatia said. Some of the companies that lost licenses probably intend to protect their existing investments in network and other infrastructure by acquiring spectrum again, he added.

Two top Indian companies with interests in the mobile services business, Reliance Communications and Reliance Industries, also stayed away from the auction, though India's largest mobile operator Bharti Airtel is a participant, according to records of India's Department of Telecommunications.

The spectrum that is being auctioned is in the 800MHz and 1800MHz bands. Six companies are bidding in the auction which is scheduled for the middle of next month.

Companies that have stayed away may later try to get back to the market by acquisitions, Bhatia said. Reliance Industries, which stayed away from a broadband wireless auction in June last year, soon after acquired Infotel Broadband Services which won licenses for broadband wireless services in India

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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Tags mobilebusiness issuesmobile applicationstelecommunicationinvestmentsCarriersNTT DoCoMoSistemaTelenor

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John Ribeiro

IDG News Service
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