What's behind the sky-high BWA bids
10-06-2010
Too many deep-pocketed giants are competing. There's Qualcomm. And maybe even Reliance Industries !!
The cost of pan-India broadband (BWA) spectrum, which crossed Rs 12,000 crore (Rs.120 billion) after 14 days of bidding, has baffled analysts and stunned telecom companies participating in the auctions, many of whom concede that the price has become 'highly irrational'
"What we are witnessing is just unbelievable. Nobody even knows what the winners are going to do with the spectrum. Will they offer services using WiMax, or will it be TD-LTE? If it is the latter, that technology is four years away and even the standards for it are not fully evolved" says a top executive from one of the country's largest telcos.
A closer look throws up some drivers behind the sky-high bids. Driver One: Qualcomm, the world's leading wireless company, with billions of dollars in its kitty, is bidding. It may want to sell the use of its TD-LTE network wholesale to India's telcos. And it's OK if standards are not fully evolved today: Qualcomm is in R&D and its experience in India may even help fortify its patent pool.
Driver Two. India's topmost private company Reliance Industries Ltd (RIL) is thinking of entering the business of providing broadband Internet to corporates. It is reportedly likely to set up a special purpose vehicle (SPV) to acquire one of the BWA auction winners. It is widely believed in industry circles that Mahendra Nahata-owned Himachal Futuristic's arm, Infotel Broadband Services, could be a candidate for acquisition by RIL. Infotel is currently among the bidders in the BWA auction. It certainly does not have enough money to compete with the telco biggies and Qualcomm - but with a deepocket backer like RIL it might make it
Drivers Three, Four, Five: Add to this the other bidders with enormous size and stake. Take Tata Communications. Global bandwidth badshah, who for long has wanted to tie its enormous global network directly to the consumer. Then there's Bharti Airtel, the world's number 5 telco. And Reliance Communications. Among others
Yes, there's nothing irrational in the bids, if so many giants with so high a stake are involved
The cost of pan-India broadband (BWA) spectrum, which crossed Rs 12,000 crore (Rs.120 billion) after 14 days of bidding, has baffled analysts and stunned telecom companies participating in the auctions, many of whom concede that the price has become 'highly irrational'
"What we are witnessing is just unbelievable. Nobody even knows what the winners are going to do with the spectrum. Will they offer services using WiMax, or will it be TD-LTE? If it is the latter, that technology is four years away and even the standards for it are not fully evolved" says a top executive from one of the country's largest telcos.
A closer look throws up some drivers behind the sky-high bids. Driver One: Qualcomm, the world's leading wireless company, with billions of dollars in its kitty, is bidding. It may want to sell the use of its TD-LTE network wholesale to India's telcos. And it's OK if standards are not fully evolved today: Qualcomm is in R&D and its experience in India may even help fortify its patent pool.
Driver Two. India's topmost private company Reliance Industries Ltd (RIL) is thinking of entering the business of providing broadband Internet to corporates. It is reportedly likely to set up a special purpose vehicle (SPV) to acquire one of the BWA auction winners. It is widely believed in industry circles that Mahendra Nahata-owned Himachal Futuristic's arm, Infotel Broadband Services, could be a candidate for acquisition by RIL. Infotel is currently among the bidders in the BWA auction. It certainly does not have enough money to compete with the telco biggies and Qualcomm - but with a deepocket backer like RIL it might make it
Drivers Three, Four, Five: Add to this the other bidders with enormous size and stake. Take Tata Communications. Global bandwidth badshah, who for long has wanted to tie its enormous global network directly to the consumer. Then there's Bharti Airtel, the world's number 5 telco. And Reliance Communications. Among others
Yes, there's nothing irrational in the bids, if so many giants with so high a stake are involved
