India’s long-awaited 3G auction to begin January 16, 2009

Parties interested in participating in India’s long-anticipated 3G auction have two weeks until entries close on January 5, 2009, with the auction scheduled to commence on January 16.

The reserve price for 3G licences in metro and category A circles will be set at INR 1.6 billion (US$34 million)

The country’s auction for WiMAX will also take place two days following the sale of the 3G licences.

State-backed operators BSNL and MTNL have automatically received 3G licences for all 22 telecommunications circles – except in two where it is not offered at all – with one block of spectrum reserved in each circle.

However, the service providers still have to pay a licence fee, equivalent to the highest bid in each area. MTNL launched initial 3G services in Delhi on December 11.

Foreign bidders are eligible to participate in the online auction for the 15-year licences, but must have a local partner and can not hold more than a 74 per cent stake in the joint venture. If the foreign partner owns more than 49 per cent, the venture will also require clearance from the country’s Foreign Investment Promotion Board (FIPB).

Bidders must already hold a Unified Access Service License (UASL) or Cellular Mobile Telephone Service (CMTS) licence, or have experience in providing 3G services with the intention to acquire a UASL licence before commencing operations.

In most of the 22 circles four paired blocks of spectrum will be auctioned, however, in the Rajasthan and North East circles, 3G spectrum is not available at all.

Reserve prices for metro and category A circles is INR 1.6 billion (US$34 million); category B circle is INR 800 million (US$17 million); and category C is INR 300 million (US$6.4 million).