India to raise $9.8 billion from phone spectrum bidding
February 14, 2014 11:31 am
India raised almost $10 billion from a bidding of wireless spectrum that saw billionaire Mukesh Ambani’s Reliance Jio Infocomm Ltd. emerge as a possible competitor to Vodafone Group Plc and Bharti Airtel Ltd..
The government got 375.7 billion rupees ($6 billion) of bids for the 1,800 megahertz band in 22 regional zones and 235.9 billion rupees for 900 MHz in Mumbai, New Delhi and Kolkata, Suraj Radhakrishnan, vice president at auction facilitator e-Procurement Technologies Ltd., said yesterday. The government valued the spectrum on sale at a minimum of 490 billion rupees.
Reliance Jio joins Vodafone, the biggest spender in the auction, billionaire Sunil Mittal’s Bharti and other operators in seeking to tap the world’s biggest wireless market by users after China as mobile-data usage surges. Part of the proceeds are due upfront, boosting Prime Minister Manmohan Singh’s push to pare the fiscal deficit before the budget next week.
“This was an expensive auction which is going to take its toll on balance sheets of the companies that are already deep in debt, like Bharti,” said Harit Shah, a Mumbai-based analyst with Nirmal Bang Equities Ltd. Reliance Jio, the newest entrant, bought airwaves in all of India’s key regions and may push Bharti for market share, Shah said.
Vodafone said it spent 196 billion rupees in the auction, including for key airwaves in Mumbai, New Delhi and Kolkata, with about 56 billion rupees payable this fiscal year. Some of the spectrum acquired in the 1,800 MHz band will be used for a fourth-generation mobile service, the company said.
Bharti, Reliance Jio
Bharti’s expenditure was 185.3 billion rupees, with 54.3 billion rupees due upfront, the company said in a statement. The balance is to be paid in 10 annual installments, starting after two years, it said. The company’s total debt was 733.1 billion rupees in the three months through December, up from 101.9 billion rupees in 2010.
Reliance Jio bid about 111 billion rupees, based on calculations by Bloomberg News using provisional auction data released by the Indian government. The company bought 1,800 MHz spectrum in 14 telecom regions.
“This is a great result for Vodafone,” said Nirmal Bang’s Shah. “They’ve just become a monster in India and still have a pile of cash at their disposal after the Verizon deal.”
India, the world’s fastest growing smartphone market, has become a primary destination for Vodafone’s 7 billion-pound ($11.5 billion) “Project Spring” campaign, a network upgrade funded by the company’s $130 billion sale of its stake in Verizon Wireless in the U.S.
Broadband Demand
About 82 percent of the spectrum on offer was sold, Telecommunications Secretary M.F. Farooqui told reporters in New Delhi yesterday. Expectations of rising mobile-data use fueled demand, he said.
India had 753 million active wireless subscribers as of November, according to the Telecom Regulatory Authority of India. An increasing number of wireless users are switching to smartphones in the South Asian nation, spurring carriers to raise broadband capacity.
Vodafone has said data use in India more than doubled in the three months ended Dec. 31. Bharti’s mobile data revenue also more than doubled in that period.
Proceeds from the auction will help India trim its budget deficit. The government seeks to narrow the shortfall to 4.8 percent of gross domestic product in the year ending March 31.
Budget Deficit
The government will receive at least 183 billion rupees from the spectrum sale within 10 days, Farooqui said. Companies have the option of paying a third of the 1,800 MHz fee upfront and the rest by 2026. For 900 MHz, they can pay a quarter of the fee upfront and the remainder by the same date.
“This will see a smile on the face” of Finance Minister Palaniappan Chidambaram, Telecommunications Minister Kapil Sibal told reporters in New Delhi yesterday, referring to the funds raised.
Other participants in the auction included Idea Cellular Ltd., Aircel Ltd., billionaire Anil Ambani’s Reliance Communications Ltd., Tata Teleservices Ltd. and Telenor ASA’s Telewings Communications Services Pvt.
After the auction, the government “hopes tariffs will remain reasonable in the years to come,” Sibal said. “Carriers are stretched in the short term, but not in the long term.”
The Cellular Operators Association of India said in an e-mailed statement that “it remains to be seen if the operators will have the financial resources to invest in networks and marketing after bearing the high spectrum cost.”
Reliance Industries operates the world’s largest refining complex. The group started moving back into telecommunications in 2010 when it agreed to pay 48 billion rupees for control of Infotel Broadband Services Ltd.
Reliance Jio is aiming to make a foray into the country’s mobile-voice and data market. The company said in December it was setting up infrastructure across India to provide high-speed Internet and communication services.
The government’s two previous auctions of spectrum flopped because the floor price discouraged bidders. That led it to lower the minimum price for the latest auction.
The material has been provided by InstaForex Company – www.instaforex.com
India raised almost $10 billion from a bidding of wireless spectrum that saw billionaire Mukesh Ambani’s Reliance Jio Infocomm Ltd. emerge as a possible competitor to Vodafone Group Plc and Bharti Airtel Ltd..
The government got 375.7 billion rupees ($6 billion) of bids for the 1,800 megahertz band in 22 regional zones and 235.9 billion rupees for 900 MHz in Mumbai, New Delhi and Kolkata, Suraj Radhakrishnan, vice president at auction facilitator e-Procurement Technologies Ltd., said yesterday. The government valued the spectrum on sale at a minimum of 490 billion rupees.
Reliance Jio joins Vodafone, the biggest spender in the auction, billionaire Sunil Mittal’s Bharti and other operators in seeking to tap the world’s biggest wireless market by users after China as mobile-data usage surges. Part of the proceeds are due upfront, boosting Prime Minister Manmohan Singh’s push to pare the fiscal deficit before the budget next week.
“This was an expensive auction which is going to take its toll on balance sheets of the companies that are already deep in debt, like Bharti,” said Harit Shah, a Mumbai-based analyst with Nirmal Bang Equities Ltd. Reliance Jio, the newest entrant, bought airwaves in all of India’s key regions and may push Bharti for market share, Shah said.
Vodafone said it spent 196 billion rupees in the auction, including for key airwaves in Mumbai, New Delhi and Kolkata, with about 56 billion rupees payable this fiscal year. Some of the spectrum acquired in the 1,800 MHz band will be used for a fourth-generation mobile service, the company said.
Bharti, Reliance Jio
Bharti’s expenditure was 185.3 billion rupees, with 54.3 billion rupees due upfront, the company said in a statement. The balance is to be paid in 10 annual installments, starting after two years, it said. The company’s total debt was 733.1 billion rupees in the three months through December, up from 101.9 billion rupees in 2010.
Reliance Jio bid about 111 billion rupees, based on calculations by Bloomberg News using provisional auction data released by the Indian government. The company bought 1,800 MHz spectrum in 14 telecom regions.
“This is a great result for Vodafone,” said Nirmal Bang’s Shah. “They’ve just become a monster in India and still have a pile of cash at their disposal after the Verizon deal.”
India, the world’s fastest growing smartphone market, has become a primary destination for Vodafone’s 7 billion-pound ($11.5 billion) “Project Spring” campaign, a network upgrade funded by the company’s $130 billion sale of its stake in Verizon Wireless in the U.S.
Broadband Demand
About 82 percent of the spectrum on offer was sold, Telecommunications Secretary M.F. Farooqui told reporters in New Delhi yesterday. Expectations of rising mobile-data use fueled demand, he said.
India had 753 million active wireless subscribers as of November, according to the Telecom Regulatory Authority of India. An increasing number of wireless users are switching to smartphones in the South Asian nation, spurring carriers to raise broadband capacity.
Vodafone has said data use in India more than doubled in the three months ended Dec. 31. Bharti’s mobile data revenue also more than doubled in that period.
Proceeds from the auction will help India trim its budget deficit. The government seeks to narrow the shortfall to 4.8 percent of gross domestic product in the year ending March 31.
Budget Deficit
The government will receive at least 183 billion rupees from the spectrum sale within 10 days, Farooqui said. Companies have the option of paying a third of the 1,800 MHz fee upfront and the rest by 2026. For 900 MHz, they can pay a quarter of the fee upfront and the remainder by the same date.
“This will see a smile on the face” of Finance Minister Palaniappan Chidambaram, Telecommunications Minister Kapil Sibal told reporters in New Delhi yesterday, referring to the funds raised.
Other participants in the auction included Idea Cellular Ltd., Aircel Ltd., billionaire Anil Ambani’s Reliance Communications Ltd., Tata Teleservices Ltd. and Telenor ASA’s Telewings Communications Services Pvt.
After the auction, the government “hopes tariffs will remain reasonable in the years to come,” Sibal said. “Carriers are stretched in the short term, but not in the long term.”
The Cellular Operators Association of India said in an e-mailed statement that “it remains to be seen if the operators will have the financial resources to invest in networks and marketing after bearing the high spectrum cost.”
Reliance Industries operates the world’s largest refining complex. The group started moving back into telecommunications in 2010 when it agreed to pay 48 billion rupees for control of Infotel Broadband Services Ltd.
Reliance Jio is aiming to make a foray into the country’s mobile-voice and data market. The company said in December it was setting up infrastructure across India to provide high-speed Internet and communication services.
The government’s two previous auctions of spectrum flopped because the floor price discouraged bidders. That led it to lower the minimum price for the latest auction.
The material has been provided by InstaForex Company – www.instaforex.com
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