views

Vodafone pays £1.74bn for Indian 3G

Steve Dinneen
Follow Steve
VODAFONE yesterday paid £1.74bn for a section of the Indian mobile phone spectrum to provide 3G services.

The telecoms giant was involved in a fierce bidding war that pushed the price far higher than it hoped to pay.

The auction raised a staggering £10.2bn for the Indian government after major players slogged it out to win contracts.

The auction was divided into 22 distinct areas of India. Vodafone secured 3G coverage in Delhi, Mumbai, Maharashtra, Gujarat, Tamil Nadu, Kolkata, Haryana, Uttar Pradesh and West Bengal.

Indian network provider Bharti was another dominant presence, with the two firms combined spending more than £3.55bn.

Vittorio Colao, chief executive of Vodafone, said “This has been a very competitive auction for limited amounts of spectrum. Vodafone has secured a strategic footprint covering a large proportion of our existing and future revenues, particularly in the metropolitan areas.”

No single carrier gained high speed access to all 22 regions. Vodafone already has 2G coverage for the whole of India.

Vodafone announced this week it was forced to take a £2.3bn impairment charge on its Indian division due to unexpectedly fierce competition. It revealed overall profits of £8.7bn, up from £4.2bn a year earlier. Revenue for the group rose 8.4 per cent to £44.5bn.

SPECTRUM: THE LOWDOWN
Q. WHAT IS THE MOBILE SPECTRUM?

A. It is the radio waves over which voice and data information is sent. Without spectrum you cannot make any calls or access the internet.

Q. HOW DO YOU GO ABOUT BUYING IT?

A. The spectrum is generally owned by the government of the country the network provider is operating in. It will generally decide how many licenses it will provide before the auction.

Q. IS ALL OF THE MOBILE SPECTRUM THE SAME?

A. No. The spectrum is measured in MHz. different frequencies of spectrum are useful for different things. Lower frequencies are better for transferring data and higher ones for calls.

Q. WHAT IS IT VODAFONE WAS BIDDING FOR IN INDIA?

A. Vodafone was bidding for 3G licenses. The Indian government separates the spectrum into 22 zones, with three licenses available in each (i.e. there are now three mobile network providers in each region).

Q. HOW DID THE BIDDING PROCESS WORK?

A. Every 90 minutes bidders were given the chance to match rival bids until there were only three left for each of the 22 sectors.