News Analysis - Uninor Opts Out of 3G Bid

About the News

The Communication Ministry of India opened bids for 3G Technology & set the floor price at Rs 3500 crores. The last date for application was March 19 & the Ministry expects to get about Rs 35000 crores from its existing 11 to 12 operators. There will be 3 slots available each in the auctioned 17 areas & 4 in remaining 5 areas. The operations are expected to be carried on from September 1, 2010. All the leading operators in the country like Bharti Airtel, RCOM, Vodafone-Essar, Tata Tele-Services placed bids except Uninor. The Managing Director of Uninor, Mr. Stein Erik had made it clear that the company does not see a business case for bidding for 3G airwaves. Also globally many countries have already started deployment of 4G technology & Uninor also wants to evaluate it.

Analysis

The cost of deployment of 3G technology is very high for the operators. In many countries, companies had paid astronomical figures for the purchase of 3G rights & had been left with little money for building its infrastructure. Also the US company, Qualcomm is already in plans to bid fro the Broadband Wireless Access (BWA) at the end of this year. If it succeeds in it, India might even have 4G technology as early as next year along with the other countries. The company is also making chipsets combining both the 3G & 4G technology so that the user can switch between the 3G & 4G networks. So, if Uninor straight away implements the 4G technology, it can avoid a lot of cost on purchase of 3G technology & can surely make some serious business out of the 4G technology.