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Vodafone Pleads for More Time in India 3G Sale
(28 Oct 2008, BWCS Staff)One of the main players in the forthcoming Indian auction of 3G licences has asked the government to postpone the sale. Vodafone Essar, owned by Vodafone in the UK, has apparently written to the Department of Telecoms in India to say that "mobilizing financial commitments in the current economic environment is proving difficult." The government is expected to hold the auction in December, but Vodafone warned it will be difficult to arrange financing by then.
Vodafone took over Hutchison Essar, India's fourth largest mobile operator in a US$10.9 billion buy-out in May 2007. According to press reports in India, the mobile operator's spokesperson on emerging markets has said that an auction in early 2009 would make more sense - he apparently pointed out that this would also avoid any conflict with the holiday period. A senior DoT official, however, said there is no decision yet on delaying the auction due to the financial crisis unless the Finance Ministry thinks otherwise.
Numerous regulatory and financial delays have meant that the 3G sale in India has been held up several times already. Estimates made prior to the recent financial crisis indicated that the sale could raise as much as US$10 billion for state coffers. State-run telcos Mahanagar Telephone Nigam Ltd (MTNL), which offers its services in Delhi and Mumbai, and Bharat Sanchar Nigam Ltd (BSNL) which operates in the rest of the country, have already been allotted frequency spectrum for 3G mobile phone services. However, the two companies will be forced to pay the government amounts equal to the highest qualified bidder among the private players.
The DoT also plans to hold an auction for 3G mobile phone providers who use the CDMA technology platform. The earlier plan was to allocate the scarce frequency spectrum on the basis of higher subscriber bases.
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