India to hold another spectrum auction by March 2013

India’s government plans to hold another auction of spectrum before March 2013 following the disappointment of last week’s awards process.

Hyped for months in advance, the auction of second-hand 2G spectrum netted just 94.07 billion rupees ($1.7 billion) for government coffers, falling well short of the 400 billion rupees authorities had hoped for.

Some 144 blocks of spectrum were put up for sale, but 43 of them attracted no interest whatsoever.

India’s government plans to hold another auction of spectrum before March 2013 following the disappointment of last week’s awards process.

Hyped for months in advance, the auction of second-hand 2G spectrum netted just 94.07 billion rupees ($1.7 billion) for government coffers, falling well short of the 400 billion rupees authorities had hoped for.

Some 144 blocks of spectrum were put up for sale, but 43 of them attracted no interest whatsoever.

Those included allotments in Delhi and Mumbai, two of the most lucrative telecoms markets in the country, as well as spectrum used with CDMA-based technologies.

Authorities intend to re-auction the frequencies that went unsold.

The high reserve prices set by Indian authorities appear to have dissuaded many companies from participating in last week’s process.

The airwaves were previously awarded in 2008, but the original owners were stripped of their licenses earlier this year when India’s Supreme Court found there had been widespread irregularities in the sale.

In the meantime, the pace of growth in India’s telecoms market has slowed to a crawl, with some of its biggest operators reporting declining profits.

An auction of 3G spectrum in 2010 generated $15 billion, about twice what the government was expecting, but 3G services have since failed to engender much enthusiasm among Indian consumers.

Telenor (Oslo, Norway), which lost licenses it received in 2008 as a result of this year’s Supreme Court decision, emerged as the biggest buyer last week, paying 40.2 billion rupees for licenses in six areas.

But the operator failed to win licenses in Mumbai, Kolkata and West Bengal and will now have to quit operations in those markets.

Meanwhile, Idea Cellular (Mumbai, India) paid 20.3 billion rupees for three spectrum blocks, Videocon (Gurgaon, India) paid 21.3 billion for 22 blocks, Vodafone (Newbury, UK) spent 12.95 rupees on 23 blocks and Bharti Airtel (New Delhi, India) handed over just 87 million rupees for one block.

Telenor is to re-enter the market through its Telewings Communications entity in partnership with Lakshdeep Investments & Finance (Mumbai, India), an Indian investment company.

The Norwegian player previously operated under the Uninor brand in collaboration with Indian real-estate business Unitech (Gurgaon, India), but the two companies fell out in the wake of the 2G spectrum scandal.