Bangladesh 3G: Five operators; four licenses, floor price of USD 20 million per MHz

Posted on October 22, 2012 / 4 Comments

One more qualified bidder than number of slots is a prescription for a bidding frenzy. But then, something like this has been done before. In the UK they had one more slot than there were existing operators. The consequences of being the only 2G operator who failed to get a 3G license drove up the prices. That should do it in Bangladesh too, unless someone comes up with a clever solution. The very fact that the UK auctions happened more than a decade ago and have been studied to death reduces the chances of the UK outcome being repeated.

The telecom ministry has proposed $20 million for per megahertz spectrum as the starting price in the 3G spectrum auction early next year.
State-owned mobile operator Teletalk will get a licence without participating in the auction, while five local private operators along with foreign firms will fight for the rest four licences.
Winners will be able to pay the spectrum charges in two instalments — the first one at 60 percent and the final one at 40 percent.
Telecom Secretary Sunil Kanti Bose said the proposal on the floor price was sent to the finance ministry recently for its approval.
The telecom ministry yesterday sat with stakeholders, including the mobile operators, for the second time to discuss the 3G (third generation) guideline and the auction process.
Bose said, “We have proposed the amount keeping in mind the spectrum prices for 2G licence renewal.”
The operators would get the opportunity to buy minimum 5 MHz to maximum 15 MHz spectrum to launch the 3G service.
Previously, the telecom regulator proposed the floor price for the auction at $30 million for per MHz and suggested the operators should buy at least 10 MHz spectrum.

Report.

4 Comments

Abu Saeed Khan
October 22, 2012, 8:10 am
Excerpt from a recent report in the Daily Star:

“Sunil Kanti Bose, telecom secretary, said the telecom operators lost appetite for further investment as licence renewal for four companies got stuck in a rut. The operators are going to court frequently and the renewal process is still pending, Bose said.

The BTRC is piling pressure on the operators in the name of generating revenues, while other state agencies oversee the revenue-related matters, Bose said in the meeting. He also said, due to the regulatory environment the sector has become uncertain and it is no more in a flourishing condition.”

Mr. Bose is assuming the Chairman’s position in BTRC tomorrow (October 23, 2012). Good luck to him.
mahesh9910
October 23, 2012, 5:07 pm
this is the best way to allocate scares resources. However, cannot accept the fact that the goverment operator is not part of the auctioning process and as a result there could be an arbritage as the cost structure different for the governmemt operator.
Rohan Samarajiva
October 23, 2012, 6:09 pm
Indeed. Why not have Teletalk also pay? So that it is more of a level playing field.

In Bhutan, they auctioned a license. The govt owned operator was already operating mobile services. Bhutan Telecom was told that their license fee would be set by the auction. They did pay that amount.

So there’s the model from neighboring Bhutan.
mahesh9910
October 24, 2012, 1:17 pm
Even the government can use the government operators to increase the price of the licence in the bidding process if properly managed. I know it is happening in money market where government use government controlled funds to control the policy rates.