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India's 3G auction gets under way

9 April 10 13:44 GMT

Mobile phone firms have begun placing bids in the much-delayed auction for India's third generation (3G) licences.

The auction is expected to deliver the government at least $8bn (£5.2bn) and could last a number of weeks.

Nine telecoms firms are bidding for three pan India licences that cover 22 regions, with prices starting at $789m.

Leading Indian operators such as Bharti Airtel and Vodafone Essar are among the applicants bidding for the spectrum, along with Tata DoCoMo.

"The auction has started and it is going smoothly," said a telecom ministry official.

The government owned operators MTNL and BSNL, which already offer 3G services, will also pay the same price as the three winners of the auction for the pan-Indian licences.

Analysts say that the bidding for the 20-year 3G licenses will be aggressive and could push the total raised closer to $11bn.

The battle for spectrum is intense in the fast-growing market where the larger private operators have been restricted in their ability to deliver voice and data services.

Allocations to 2G spectrum were halted in March 2009, until the government announces a new allotment method.

The 3G services will give mobile phone users the ability to download content such as music and videos at faster speeds.

Wireless access

Two days after the completion of the 3G auction 11 telecoms companies will bid for rights to offer broadband wireless services.

The government has stipulated a floor price of $389.5m for each of the two broadband slots up for sale.

Competition among the operators for the lucrative Indian mobile phone market is intense with call costs slashed to less than a cent a minute, according to analysts.

The total number of mobile phones sold in India has jumped nearly 300% over the past few years, from 35 million in 2005 to 130 million in 2009, according to the Indian Cellular Association.

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