Bidding for nationwide 3G spectrum in India approached the INR13,000 (US$2.9 billion) mark over the weekend, prompting fears that even the largest Indian telcos could drop out of the process. “We are 100 percent positive that the current 3G prices have exceeded the realistic targets set by operators prior to the bidding process,” KPMG telecom analyst Roman Shetty told India’s Economic Times newspaper. Analysts predict that the high-costs involved could see large operators focus on acquiring spectrum in key zones rather than nationwide, possibly being satisfied with licenses in only around 15 of India’s 22 telecoms circles. While incumbent operators will still vie for pan-India 3G airwaves, it may not be easy as smaller and newer players will concentrate on specific circles, noted Shetty. Bidding in key zones such as Delhi or Mumbai has already reached INR2,500 crore (US$550 million), many times the base price of INR320 crore, according to reports.

Nine Indian mobile firms, including Indian market-leaders Bharti Airtel, Reliance Communications and Vodafone, are competing for slots of 3G airwaves. However, analysts predict that bids to date have already surpassed the war chests lined up by the largest operators. Economic Times notes that Bharti Airtel is using its INR8,000-crore (US$1.8 billion) reserves with additional funding plans in place to meet a shortfall, while Vodafone has raised a INR10,000-crore loan. Idea Cellular and Tata Teleservices have secured loans of INR9,500 crore and INR8,500 crore, respectively, to finance the auctions. “Given that the auction is still on and total funds availability is finite, even mobile operators with the deepest pockets are likely to be stretched financially,” admitted a source at Vodafone.