The Indian government held least cost subsidy auction (lowest bid for subsidy is the winner) in two parts to disburse the world’s second largest Universal Service Obligation Fund (USOF) for rolling out mobile services in rural areas across the country. For the purposes of the auction, India has been divided into 81 clusters. Part A of the auction disbursed funds for passive infrastructure like towers and Part B dealt with the actual deployment of mobile services.
The bidding has been intense for deployment of mobile services (Part B) and most of the bids were for zero subsidy fund and in some cases negative bids were made! This strongly indicates that mobile operators in India perceive deploying mobile services in India’s rural areas to be commercially viable. Of the 81 clusters, results have been declared for 24 clusters that have been won by BSNL, Dishnet Wireless and Reliance. The remaining 57 clusters have to be re-bid because of tie between the third and fourth operators! The absence of Bharti from the list is a bit surprising.
The results of Part A of the auction for deploying passive infrastructures like towers and base stations were more uneven. BSNL has won 80% of the $570 million USO fund to deploy passive infrastructure like mobile towers in rural areas across the country. BSNL won 63 of those clusters and will be deploying around 6000 mobile tower, the remaining clusters were won by other operators.
The USO least cost subsidy auction for fixed lines that was held in the past also resulted in BSNL bagging the majority of the clusters. However, unlike the previous auction the current auction resulted in bids being about 30% lower than the benchmark bidding rate due to “severe competition and bidder interest.” That is indeed a positive development.
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