The Mobile Internet Report Key Themes*

India – Upcoming Auction to Bring 3G to Massive Subscriber Base
Incumbents Likely to Win Spectrum Given ~$1B Price Tag
Indian government recently announced policies / pricing of upcoming 3G auction (expected by CH1:10E)
– The minimum bids for 3G / WiMAX spectrum have been set at ~$715 MM / ~$357MM, respectively. A
total of five 3G licenses + three WiMAX licenses will be sold, allowing five players to offer 3G services in
every circle. One of the licenses has already been reserved for state-owned telecom carriers BSNL +
MTNL, who are currently initiating their 3G network rollout and will pay the highest bid price for their
spectrum allocation after the auction is completed.
Incumbent 2G carriers with strong balance sheets will likely win spectrum auction – We believe Bharti,
Reliance Communications, Vodafone, Idea, and Tata could be aggressive bidders, whereas we do not
believe the new operator/entrants have the balance sheets to support 3G.
Morgan Stanley Estimate of India 3G Spectrum License Cost / Total 3G
Investment / Required Network Capex
India 3G Spectrum
Licence Cost per
Carrier ($MM)
Total 3G Investment ($MM),
based on Number of Players
5 10
Capital Expenditure
Required for Network
Rollout ($MM)
Maximum Auction Price $1,300 $6,500 $13,000 $4,570
Base Case Auction Price $1,000 $5,000 $10,000 $4,570
Minimum Auction Price $802 $4,010 $8,020 $4,570
Source: Vinay Jaising, Morgan Stanley Research.
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