Reliance Comm, Tata, Vodafone – big losers of Wireless Broadband Auction! Reliance Industries steps into Telecom via Infotel

The Broadband Wireless Auction (BWA) is over and the results are quite surprising. After 2 weeks of bidding for 22 telecom circles, 2 private parties were selected for each telecom circle apart from the government run BSNL/MTNL.

Interestingly, a telecom startup Infotel (a subsidy of HFCL) managed to win pan india wireless broadband license for a whopping 12,847 crores. The so called telecom heavy weights like Airtel, Reliance communication made a poor show with Airtel winning only license for 4 circles and RCom backing out of the bidding process in last few days. Also, other notable players like Tata Communcations, Vodafone, Idea Communications haven’t won any single license.

Upcoming telecom player Aircel has won the spectrum for 8 circles, Qualcomm has won 4 circles, and some unknown players (at least to me) like Tikona and Augere won 5 circles and 1 circle respectively.

Some of the interesting facts :

1. Indian Telecom industry is no more a “Voice” business. With telecom ARPU rates already at one of the least in the world and getting even worser with the stiff competition, “Data” is the the only way to do a significant business in future. Presently around 10% of indian telecom revenues are from Data (thanks to SMS). So, having a data license, mean wireless broadband license is considered to be bright business in future.

2. Why should Reliance Communication back out of the bidding process in the last few days ? How come a telecom startup like Infotel can manage to win pan india wireless broadband spectrum ?

We all knew about the truce flag hoisted between Ambani borthers few weeks back (after which we saw quite a few new business developments) and this helped Mukesh Ambani to come back to telecom market. Yeah, the big brother is back to telecom with a bang. Reliance Industries acquired 95% of the Infotel just few days after it won pan india license. Now we know, who backed Infotel during the bidding process.

Anil Ambani made a way for Infotel by backing out of the bidding process. Why should he help Infotel ? Ambani brothers should have gone into an understanding during the bidding process itself. Most likely, we would see some partnership between Ambani brothers in the telecom in the near future. With its massive optic fibre infrastructure, Reliance communications could be the best partner for Reliance Industries (Infotel) to roll out its services faster.

3. Other notable player these days is Aircel. It has won spectrum in 8 circles, the second highest wins overall. During the 3G Auctions, it had won spectrum in 13 circles. Interestingly, it has 3G spectrum in all the circles where it won wireless Broadband spectrum.

Again, the biggest winner of the auction is the Indian Government. It managed to pull over Rs. 38,543 crores from BWA alone. Already it had managed mint around Rs. 67, 719 crores from the 3G auction which happened few weeks back. Together, Indian Government treasure sell by over 1 lakh crores.