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3G auction

3G auction. International players with 3g experience will be allowed to bid for the spectrum. Incumebent at advantage as incremental cost to upgrade is less and additional invenstment of Rs 16.6bn towards UAS license fee. Pricing universally for auction varies from US $ 1.7 to US $583.

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3G auction

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  1. 3G auction • International players with 3g experience will be allowed to bid for the spectrum. • Incumebent at advantage as incremental cost to upgrade is less and additional invenstment of Rs 16.6bn towards UAS license fee. • Pricing universally for auction varies from US $ 1.7 to US $583. • Other parameter prcing per hertz.

  2. 7 metro and category A cirlcecontrbute 57% of industry revenue. • Any bidding above Rs 42bn Is likely to be negative , more so for operator with pan india operations. Eligibility” UAS licensees and internations player with 3g experience. One band reserved for bsnl and mtna at highest bid pricec

  3. Spectrum allcation: 2 X 5mhz in band of 2.1 gzh Also in band of 450 and 800mhz and 1900 subject to availability. Cdmaoperatio have option to seek 2 X 1.25 in 800mhz at highest bidding prices. No spectrum fee for first year. After which 1% of revenue would be charged. 3g spectrum would ease prssure from existing 3g spectrum and improve QOS

  4. NPV of 84bn dollars based on revenue and profitability of bhartiairterl • Any bidding aoveRs 43bn (50% of npv) shall be negative for all operator.

  5. Resrve Price for Pan India Operation • Reserve price at $35 bn • Mumbai dElhi and circle a 7*3.2bn • Koklotta and circle b 8*11.2bn • Circle c 5*.3bn • Successful bidder will offer 3g spectrum of 20 years. Not UAS license holder wil be granted license at existing price

  6. Roll out obligation • Metrosl 90% of metro area in 5 years • A, b , c circle 50% o DHQ out of which 15% should be rural SDCAs • Tax benefit under section 80IA would be applicable on 3g services.

  7. 3g Expensive? • In world yes,becauseof • High license fee and • Using of different frequency for 3g which requires completely new infrastructure • Upgardation from 2 to 2.5g require • GGSN – gateway GPRS support node • SGSN – serving GPRS support node

  8. Upgradation from 2.5 to 3 g require • Node b *(equivlanet to bts in gsm) • RNs radio network controlller( equivalent to BSC in GSM) • Capex require is hence higher • Per site cost of RNC and node b comes aound US$ 20,000 – 25,000

  9. 3g has voice capacity of 4-5x times 2g spectrum. • Due to higher voice capacity 3g can deliver higher cost effective voice services. • Existing network with radio infrastructure can be upgraded to universal mobile telecommunication system (umts) • Older site with more than 5 year require new umts. • Increase from 2g to 3g increase capacity to 4-5 times. • Capex for 2g roll ut had been Us$ 100 per subscirber.

  10. Parameter to consider 3g • Penetration lever: metro 3g next revenue driver • Arpu per user: Higher ARPU would lead to higher bidding • No of bloakc and quantum of spectrum: higher participan aggressive pricing. DOT givnig 2X5 mhz , world over 2 x 10mhz • Existing spectrum constrains.

  11. Fair priace • Revenue as percentage of movile revenue: • .2% for fy10, 1% fy 11, increading to 10% in fy18 • EBITDA margin for first year at 10%. EBIDTA margin can be achieved at 45% considering low spectrum usage charges. • Tax rate of 12.5% for first year and 30% for subsequent years.

  12. capex • Cpaex at 20,000 to 25000 per • Upgrade to 3g at 21,000 site in metro by fy 12 , 41k by fy 15 fy 56,000 fy 18 • Terminal value of 4% , wacc 12%

  13. Gloabexerience • 3g wireless subsciber increased from 1.7% in dec 2004 to 10% in june 2008 • ARPuincerassed by 225in june 2008 • 2g+ gprs ==2.5 gdta speed 160kbps • 2.5g + edge = 2.75 g data speed of 473kbps • Cdma 2000=2.5 g • Cdma 20000+umts = 3g

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