India telecom airwaves sale opens to muted response

NEW DELHI Mon Nov 12, 2012 4:22am EST

NEW DELHI Nov 12 (Reuters) - A sale of Indian 2G mobile phone airwaves opened to a muted response on Monday, with no bidding seen for some of the telecommunications zones on offer in the auction that has been criticised by carriers as too pricey.

India is for the first time selling second-generation mobile spectrum through an auction after the Supreme Court ordered the revoking of permits granted to eight carriers in a scandal-tainted process in 2008.

"There are no bidders in some circles," said a senior government official who declined to be named.

Media reports said there were no offers in some of the top circles, including the expensive Delhi and Mumbai zones, after the first two rounds of bidding.

Five operators - Bharti Airtel, Vodafone Group Plc's local unit, Norway's Telenor ASA, Videocon Telecommunications, part of India's Videocon Industries , and Idea Cellular - had applied to participate in the auction.

Norwegian telecommunications group Telenor needs to win spectrum in the auction to continue operations in India, the world's second-biggest mobile phone market, as it is set to lose all its permits.

Idea Cellular, set to lose seven of its licences, has to win them back to retain its pan-India presence.

The government had set a bid starting price of 140 billion rupees ($2.6 billion) for 5 megahertz of airwave space in all of India's 22 telecommunications zones. The base price was more than seven times what carriers paid in 2008.

The finance ministry had initially estimated the auction would raise 400 billion rupees, betting on it to rein in its high fiscal deficit.

Indian mobile phone market leaders Bharti Airtel and Vodafone India, which are not affected by the court order, are taking part in the auction to buy additional spectrum.

The muted response to the 2G auction is in contrast to the sale of 3G airwaves that the government held in 2010, which lasted more than a month. India raised more than $12 billion from that auction. (Reporting by Devidutta Tripathy; Additional reporting and writing by Aradhana Aravindan; Editing by Alex Richardson)