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Reliance dominates mobile licence bidding

India said on Friday that it had received 57 bids for new cellular phone licences being auctioned by the government as part of a move to boost competition in the fast-growing business.

The bidding attracted just seven companies, almost all of them established players, unlike earlier auctions which saw a lot of small players attracted by the lure of the high-profile mobile business.

Analysts said the government was unlikely to strike it rich from the auction of the new licences as interest had been more subdued than during previous bidding rounds. "The business was new and sexy then and attracted many companies," said an analyst.

The main bidder appeared to be the country's largest and fastest-growing conglomerate, the Reliance group, which analysts said bid for a total of 30 licences through two companies.

Success in the bidding would give the group, until now a fringe player in the mobile business, access to the entire country. Reliance companies now operate mobile networks in seven states seen by analysts as least attractive.

On the government's list of bidders this time were established players like Birla-AT&T Communications, Reliance Communications, Escorts Telecommunications, Barakhamba Sales and Services, Bharti Cellular and Reliable Internet Services Ltd along with a lesser known firm, Indmobile.

Friday was the last day for putting in bids for the licences to determine the fourth cellular operator in India's four cities and 17 telecom zones. The government hopes to award the licences by the end of August after a three-step bidding process.

Each of these cities and zones have two private operators now and the government has reserved the slot for the third operator for state-run telecom giants MTNL and BSNL. These licences are being auctioned after a gap of over five years.

RELIANCE MOST AGGRESSIVE BIDDER

Analysts said the Reliance group appeared to be the most aggressive bidder as it had put in separate but identical bids through two companies.

Two companies, Reliance Communications and Reliable Internet Services Ltd, which analysts said were companies linked to the group which dominates the refining and petrochemicals businesses, had bid for the same 15 telecom zones, a government statement showed. A Reliance spokesman declined to comment when asked if the two companies belonged to the group.

The two companies put in identical bids for the four cities of Bombay, New Delhi, Madras and Calcutta and 11 states including Andhra Pradesh, Gujarat, Haryana, Karnataka, Kerala, Maharashtra, Punjab, Rajasthan, Tamil Nadu, Western and Eastern Uttar Pradesh.

"This bidding strategy shows Reliance is not taking chances. They're obviously keen to bag all 15 licences and want all odds in their favour," an official with a European investment bank told Reuters.

The group is in the midst of implementing a Rs 250-billion ($5.3 billion) project to connect the country with an optic fibre network that will offer the entire range of telecoms services from fixed-line to mobile telephony, national and international long distance telephony, data and value added services.

New Delhi-based Bharti Enterprises was the second highest bidder. Group company Bharti Cellular bid for 11 licences including those for the cities of Bombay and Calcutta.

Analysts said the group was almost certain to win the licence for Madhya Pradesh as it was the only bidder for the state. Bharti already runs a fixed-line network in the state.

The statement said Birla AT&T had bid for licences for Delhi, Madras and Karnataka and Escorts Telecommunications for eight.

Barakhamba Sales and Services, which analysts said was a company linked with Hong Kong's Hutchison and India's Essar Group, had bid for four licences while Indmobile had bid for just one licence.

The government said there were no bidders for the states of Bihar, Orissa, West Bengal, and Andaman and Nicobar islands.

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