Indian Operator Expects Lengthy 3G Delay

The 3G license auction for private operators in India, initially scheduled for January this year, is expected to be delayed until the second half of the year, according to a senior executive at IDEA Cellular Ltd.

Rajat Murkaji, chief corporate affairs officer at IDEA, believes the auction will be delayed by six months from its original date of January 16, and that's going to delay the launch of 3G services by independent operators even further.

“Even if the auction were to happen in say June/July, the first 3G service on a private network in India will only happen around early 2010,” Murkaji states in an email to Light Reading.

That, in turn, creates an even greater opportunity for state-owned operators Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL) . They have already been handed their spectrum, and the auction delay gives them a further opportunity to exploit the early-mover advantage. (See BSNL Does 3G With Ericsson, MTNL Launches 3G, and India Edges Closer to 3G.)

The one thing BSNL and MTNL don't yet know is the price they will have to pay for their spectrum -- they have to match the final price paid by the winners of the commercial auction process.

It seems it'll be a while before they find that out, though. The first delay was for only a few weeks, until January 30, but before the end of that month the process was delayed indefinitely as the Indian cabinet referred the matter to a Group of Ministers. (See India Faces 3G Delay.)

This has now been further complicated as national elections are scheduled for April and May (the entire process takes nearly a month). With a new government expected, the management of the 3G auction is likely to fall to a new Minister of Communications and Information Technology.

Despite the delay, India's operators are pushing ahead with expansive network investment plans, according to Pyramid Research .

Keeping up with the capacity requirements caused by subscriber growth and the eventual introduction of 3G has led Bharti Airtel Ltd. (Mumbai: BHARTIARTL), India’s leading mobile operator, to forecast capital expenditure of $5 billion for 2009-10, according to a new Pyramid Research report, Capex in Asia-Pacific. (See India Adds 15M Mobile Subs in January.)

— Catherine Haslam, Asia Editor, Light Reading