Insurance firms to tap market?

he much-awaited guidelines comprising listing norms for life insurance companies is likely to be ready in the next few weeks, with several insurers such as ICICI (ICICIBANK.NS : 826.6 +17.25) Prudential and HDFC Standard completing 10 years of operation. However, companies, which have not completed 10 years, would also be allowed to launch their initial public offerings.At present, life insurance companies are not allowed to raise funds through the market.
"It is in the final stages and the guidelines would be put up soon," a senior government official, who did not wish to be identified, told Hindustan Times.
At present, the foreign direct investment (FDI) limit for the sector is capped at 26 per cent. The Insurance Amendment Bill, which seeks to raise it to 49 per cent is pending before Parliament, and it may not be taken up on a priority basis, sources said.
The Insurance Regulatory and Development Authority (IRDA) has already come up with both valuation and disclosure norms comprising solvency levels and claim settlement on a half-yearly basis. The Institute of Actuaries of India had also looked into the issue. "Life insurance business is capital-intensive and we hope the listing guidelines are issued at the earliest as the FDI limit has also remained at 26 per cent," a senior executive of a Delhi-based life insurance firm.

Sebi panel may bar MFs from selling eq.uity products..

A COMMITTEE of market regulator Sebi will consider the issue of restricting mutual funds from selling an equity product that involves betting on future prices.

   The Sebi Mutual Fund Advisory Committee is concerned that this is not mutual funds' core activity and may take a decision on May 31. Equity options is a derivative product where investors bet on future value of stocks or their indices and Sebi is against mutual funds getting into the hedging business, as it could suffer losses.

   In a letter sent to all fund houses recently, Sebi had sought proposals from asset management companies (AMCs), regarding selling of equity options and an increased disclosure of their investment in this segment, sources in fund houses said. Mutual funds have already submitted their view to Sebi and they may be reviewed at the Sebi's Mutual Fund Advisory Committee meeting scheduled on May 31. "MF industry body Association of Mutual Funds of India (Amfi) has already submitted its views in consultation with industry players. The proposal would be discussed on May 31," a Sebi source said on condition of anonymity.

   The market regulator on its part wants the fund houses to control the risk exposure and clearly demarcate their risky exposure, he added. Industry players said, Sebi has been looking at ways and means of regulating distribution of MF products and also MFs investment in derivatives..

   Selling an option usually involve huge losses as the underwriter gets exposed to unlimited risks when market becomes volatile or collapses or hits the upper circuit. The objective of Sebi could be to ensure that MFs can hedge by buying options, but they should not underwrite the option as it is not the core business of MFs to take risk this way.

‘Flash Crash’ Shows How Mutual Funds and ETFs Differ

The market’s sudden drop on May 6 was stunning for investors to watch. While it had a far-reaching effect, it primarily has thrust exchange traded funds (ETFs) into the spotlight. But is that fair? Chuck Jaffe for MarketWatch reports that the meltdown only highlighted the differences between ETFs and mutual funds, showing why some investors may choose one or the other:

• ETFs are mutual funds that trade like stocks. They are priced minute-by-minute throughout the day; if you want in or out, you should get the market price the moment you pull the trigger. Some brokerages are taking expenses down to 0, helping investors that want to make the trade.With mutual funds, all transactions are made at the next closing price. [Comparing the Costs of Both Funds.]
• ETFs, typically, are focused on indexing — although there are more actively managed offerings all the time — while traditional funds focus more on active management. [Taking the Best of Both Worlds.]

Vanguard Group founder and index investing legend Jack Bogle has long said that ETF investors tend to trade at the wrong time instead of buying and holding in order to capitalize on the broader trend, and his words are once again being brought to the fore.
With all due respect to Bogle and others who are critical of ETFs in the wake of the crash, we disagree.

• First, to suggest that mutual fund investors are better served because they offer end-of-day pricing is mind-boggling. Without even getting into that argument, the benefits that ETFs offer over mutual funds still make them far more appealing and better for investors. You can’t beat their transparency, low-cost, tax efficiency and ease of use. On top of that, intraday liquidity is a superior feature that makes ETFs leaps and bounds better than mutual funds. Why wait until the end of the day to do what you want to do now?
• Second, Bogle is assuming that most investors don’t have the mental capacity to handle ETFs, but that is simply not true. Pointing fingers at ETFs and their users is just silly. Just because  there are some bad drivers on the road does not mean that all drivers need to be painted with the same broad and insulting brush.

Oil Drops Toward $68 as Risk Aversion Returns

Oil extended a drop towards $68 on Tuesday on growing concern that Europe's debt crisis would derail the global economic recovery, prompting investors to sell riskier assets in a flight to dollar safety.

The greenback gained almost 0.8 percent against a basket of currencies on Tuesday, while Japan's Nikkei average fell 3.1 percent to its lowest close in six months following a steep drop on Wall Street.

U.S. light, sweet crude [CLC1  67.799995    -2.41  (-3.43%)   ] for July delivery fell as much as $2.16 to $68.05 a barrel and was down on the day.

London Brent crude  [LCOC1  68.79    -2.38  (-3.34%)   ] slid.

"The market got ahead of itself, building in a lot of anticipation that the economy and oil demand would recover," said Tony Nunan, a risk manager with Tokyo-based Mitsubishi, referring to U.S. crude's 19-month high above $87 hit in early May.

"The fact that the dollar is strengthening is a sign of risk aversion and deleveraging. People are moving away from crude oil," Nunan said, adding that Fibonacci chart analysis showed prices would head towards $66.24.

Europe's fumbling response to a debt crisis in Greece and bulging deficits in other euro zone countries has unnerved markets over the past six weeks, and the central bank takeover of a small Spanish lender at the weekend stoked fears of a wider meltdown.

The crisis has overshadowed positive economic indicators showing that emerging and OECD nations are returning to growth after the worst recession of the post-war era.

"A lot of the economic indicators are positive, but the reality is that we have to admit that oil supply is keeping ahead of demand," Nunan said.

Last Thursday, U.S. crude touched $64.24, the lowest for a front-month contract since prices fell to $62.76 on July 30, 2009. The June contract expired that day.

"Demand is recovering, but OPEC has been slipping steadily over its production target," Nunan said.

Most estimates suggest production from the Organization of the Petroleum Exporting Countries has been rising since early 2009 as higher oil prices have encouraged members to relax adherence to output cuts announced in December 2008.

OPEC's compliance with the 4.2 million bpd of promised cutbacks has fallen to around 51 percent, according to Reuters estimates.

OPEC is worried about the oil price fall and is watching market developments closely, but it is too early to say if the producer group needs to take any action, Libya's top oil official said on Monday.

But Kuwait's Oil Minister Sheikh Ahmad al-Abdullah al Sabah said on Tuesday OPEC was not concerned about the recent drop in prices and had no plans to call an extraordinary meeting.

Oil Spill Off Singapore

A tanker and a bulk carrier collided in Malaysian waters off Singapore on Tuesday at 6:05 am (11:05 pm London time on Monday), Malaysian coast guard officials said, spilling 2,000 metric tons of oil close to the world's largest bunkering port.

The tanker Bunga Kelana 3 was carrying light crude oil and condensate when it was involved in the collision with bulk carrier MV Waily in waters between Malaysia and Singapore.

A preliminary Reuters survey showed analysts were divided over the direction of U.S. oil inventories last week.

The poll of six analysts called for an average drawdown of 100,000 barrels, but the group was evenly divided on how inventories shifted.

Distillate stockpiles including heating oil and diesel probably climbed 300,000 barrels, the poll showed, while views were mixed on whether gasoline supplies shrank or grew.

The analysts issued their forecasts ahead of weekly inventory data from industry group American Petroleum Institute, due on Tuesday at 4:30 pm New York time, and government statistics from the Energy Information Administration scheduled at 10:30 am New York time on Wednesday.

StanChart ropes in six MFs as anchor investors for IDR issue

Standard Chartered Plc On Monday managed to rope in six anchor investors for its Rs 2,400 -2,760 crore Indian Depository Receipts (IDR) that are to be issued in the Indian market.
It would raise Rs 370 crore from issuing 36 million IDRs to six mutual funds at a price of Rs 104 per IDR. While Reliance Mutual Fund bought 10.57 million IDRs, ICICI (ICICIBANK.NS : 809.35 -22.75) Prudential AMC bought 9.61 million, HDFC AMC 6.03 million, Franklin Templeton MF 4.80 million, Birla Sun Life AMC 3.55 million and Sundaram BNP Paribas 1.40 million IDRs.
The company had fixed the price band for the issue in the range of Rs 100 - 115 per IDR, hoping to raise up to Rs 2,760 crore at the upper end of the price band. The company had reserved around 30% of the QIB (Qualified Institutional Buyers), including mutual funds, to be allocated to anchor investors on a discretionary basis.
Interestingly, among all categories of investors, only mutual funds have been exempt from any kind of taxation - be it short-term or long-term capital gains tax.
Of the total issue size, 30% have been reserved for retail investors, while not more than 18% of the issue has been reserved for high net-worth individuals. Retail investors have been offered a 5% discount to the final issue price that will be finalised later through the book-building process.
Standard Chartered is the first overseas entity to raise funds from the Indian market through the issue of IDR. Ten IDRs will be equal to one share of the bank, whose shares are listed already on the London and Hong Kong stock exchange.

‘India Growth Story Is Broad-Based And Localised’

The Boston-based firm made its debut deal in India last month by investing $30 million in Krishidhan Seeds Limited.
Summit Partners, the growth equity investment firm founded in 1984, has raised more than $11 billion in capital and has provided growth equity, recapitalization and management buyout financing to over 300 growing companies across a range of industries and geographies. Summit Partners’ portfolio companies have completed nearly 125 public offerings and more than 125 strategic sales or mergers. The Boston-based firm, with a 25-year PE track record, made its debut deal in India last month by investing $30 million in Krishidhan Seeds Limited. Amit Chaturvedy, vice-president of Summit Partners, talks about the firm’s investment strategies and India office plans in an e-mail interview to VCCircle. Excerpts:-
Do you think there was a delay in Summit Partners entering the Indian PE space?India is an entrepreneurial growth market, so our growth investment strategy is a natural fit. We have been looking at the Indian market since 2008 to find the right opportunity: A rapidly growing company with a visionary management team that sees value in bringing a global, experienced growth equity investor to its Board.  Krishidhan Seeds fits that profile.
What is your view on investing in India? As an investor, you always evaluate your investment thesis and consider the risks and rewards. Investing in India is no different as compared to other countries in that sense. The risks we always consider are market risk, management risk, and execution risk.
How do you assess the current environment in India as far as investments are concerned? Has it improved much?
India seems to have recovered much faster from the financial crisis as compared to other major economies of the world.  We are finding many attractive companies in this geographic market.  Indian growth is broad based and localized, and this makes it a stable long-term growth story.
Regulatory and tax issues are more complex in India, as compared to what we have seen in the US and Europe. Indian regulators are working hard to streamline processes and provide more clarity in laws governing the various industry sectors.
What are your investment strategies for India?We are focused on companies in sectors including healthcare, education, consumer products, agriculture, telecom and power. Our exit options in India are primarily public offerings and sale to another strategic/financial investor.  We are growth equity investors and are equally comfortable taking minority or majority positions. Anyway, at this moment, we do not have plans for an Asia-specific fund. The Indian economy is a strong and resilient growth story, and it is a good market for us given our long and successful track record as growth equity investors. Our Indian investments provide a natural route for our Limited Partners to increase their exposure to this market. We are looking at companies that are seeking Rs 50-500 crore of investment.
What is the rationale behind your investment in Krishidhan Seeds? India is one of the major agrarian economies of the world with a growing population and rising per capita income that have put significant pressure on its agricultural productivity.  Krishidhan Seeds’ research-driven products increase farm productivity and offer Indian farmers a strong value proposition – which will increase as more than 125 hybrids in the pipeline are released over the next three years.  We are very impressed with Krishidhan’s R&D commitment, growth trajectory, its dynamic management team, and well controlled business operations through SAP, and we look forward to a successful partnership.
In India, how many deals is Summit eyeing this year? 
We recently closed our first investment in Krishidhan Seeds for $30 million.  We are looking at a number of other attractive opportunities and we don’t have a specific target as to the number of investments made or capital invested.
How do you rate Indian entrepreneurs?
As a growth equity investor with 26 years of investment experience with rapidly growing and profitable businesses, Summit Partners sees a significant opportunity in the Indian market.  India’s strong entrepreneurial tradition, combined with a fast-growing economy, means there are many companies that can benefit from Summit’s capital investment, strategic advice and industry expertise.
What are the major hurdles in handling portfolio firms in India?
Indian companies frequently focus on growing the top-line – and justifiably so, as many sectors in India continue to evolve.  This leaves company managements with limited bandwidth to focus on corporate governance, MIS systems, and financial controls for easy data extraction and timely reporting. This issue can be addressed over time with the strong commitment of the management team.
Will Summit Partners eye investments in listed firms (PIPE deals)? Yes, we are selectively looking at PIPE transactions in India.  We are using the same investment criteria – the company should be rapidly growing, profitable and have a talented management team running the business.  Our major focus area is privately held companies where we can participate at the board level, provide strategic guidance, and make a substantial positive impact to the future value of the business.
Are there plans to set up an office in India?
We have plans to establish an India office in 2011.  We have a team of five investment professionals focused on Indian investments, and we plan to incrementally build on that team.

Billionaire Ambani Brothers Agree to Seek ‘Harmony,’ Gas Deal

RIL, ADAG cancel 2006 non-compete agreements, hope to work in harmony.
It took a gentle nudge from the Supreme Court earlier this month to signal an end to the most publicised corporate war in India. Five years after going public with “ownership issues” and more in India’s richest family, the Ambani brothers today took a big step towards reconciliation of their feud that had made headlines and dragged in several government functionaries.

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In separate statements, Mukesh Ambani-led Reliance Industries (RIL) and the Anil Ambani-led Reliance ADA Group announced the two groups had cancelled all non-compete agreements — a step they hoped would lead to cooperation between them. The non-compete pacts were signed in 2006. As a goodwill gesture, RIL said it would not enter the gas-based power generation arena till 2022, for which the two sides would enter a separate agreement.
Both groups also said they hoped to reach a conclusion soon on the gas supply agreement between RIL and Reliance Natural Resources (RNRL), at the heart of their dispute. The earlier agreement, taken to court, between the two brothers concerned the price, quantity and tenure of gas supplies by RIL. It called for 28 million units of gas a day to be sold to RNRL at $2.34 per unit for 17 years.
The announcement comes weeks after the Supreme Court ruled in Mukesh Ambani’s favour in the dispute over gas pricing and asked the two brothers to renegotiate their gas agreement within the frame work of government policies and prices.
“RIL and Reliance ADA Group are hopeful and confident that all these steps will create an overall environment of harmony, co-operation and collaboration between the two groups, thereby further enhancing overall value for shareholders of both groups,” both the groups said.
 

BUSINESS INTERESTS
ANIL AMBANI	MUKESH AMBANI
* Financial services	* Oil, gas, petrochemicals
* Telecom	* Textile
* Infrastructure	* Retail
* Media & DTH	* SEZs, ports & gas terminals
* Power	* Life sciences & biotechnology
* Healthcare	* IPL
*Combined mkt cap Rs 1,08,792 cr (*as on May 21, 2010)	*Combined mkt cap Rs 3,26,717 cr
POSSIBLE OVERLAPS IN FUTURE
* Telecom
* Financial services
* Power (non-gas)
* Infrastructure
* Media & Entertainment

Sources familiar with the development said the agreement, approved by the boards of both the companies, came after long discussions between the two brothers separately, but spokespersons of either did not confirm this.
The announcement to break the ice also came within days of Anil Ambani meeting Prime Minister Manmohan Singh and top cabinet ministers. His elder brother also did the same within a few days. It is reliably learnt the prime minister had repeatedly advised the two brothers to sort out their differences “in national interest”. When the younger Ambani sought his intervention, the prime minister reportedly told the brothers they should seek their mother’s advise and sort out differences.
The statements said “the cancellation of the existing non-compete agreement will provide enhanced operational and financial flexibility to both groups and greater ability to participate in high growth sectors such as oil and gas, petrochemical, telecom, power and financial services”.
RIL said these developments will eliminate any room for further disputes between the two groups, on matters relating to the scope and interpretation of the non-compete obligations.
This means RIL will now be also able to enter into growth sectors such as telecommunications and financial services, among others. Sources close to the development explained the agreement had been signed to allow younger brother Anil Ambani’s telecommunication business to grow.
“The agreement has been signed to help the younger brother’s business to grow. Also, RIL thinks there are growth sectors like finance, which RIL might want to get into in future,” said a source.
According to the settlement reached between the two brothers in 2006, Mukesh got the jewel, Reliance Industries, which has interests in oil and gas exploration, petrochemicals, infrastructure and textiles. Anil got the telecom, power and financial services businesses.
The non-compete pact was one reason why Reliance Communications (RCom), ADAG company, had to call off merger talks with South Africa’s MTN group, after RIL threatened to block the sale if it wasn’t given the first option to buy shares in RCom.
Meanwhile, S P Tulsian, an independent investment consultant, said this was more positive for RIL than R-ADAG, because this gives the former an opportunity to look into expansion in other areas, which they were not allowed to do earlier.
“You can’t rule out the possibility of Reliance entering in sectors such as telecom,” he said, adding Reliance shares were expected to open up on Monday.

Upfront commissions were making everybody think short-term. They will think long-term now”

The Securities and Exchange Board of India is confident that the mutual fund industry will emerge stronger and more investor-oriented following the slew of recent fundamental regulatory changes made that affected the fund industry badly so far. “The changes will force everyone to think hard on how to develop a robust long-term business model,” says KN Vaidyanathan, an executive director of SEBI, in an exclusive interview to Moneylife.
Following the regulatory changes over the last 12 months the business model of mutual funds has been profoundly affected. Fund companies have been losing assets while well-established selling and distribution strategies of fund houses have gone haywire since upfront commissions and the various ways in which intermediaries were being compensated, have been plugged. How does the regulator view these changes, especially since we are witnessing a continuous decline in equity assets over the last few months, since SEBI has a development role to play as well? “The industry will adjust. Maybe the asset size will shrink but that may be good for all, especially the serious players,” says Mr Vaidyanathan. “The industry is full of bright people. I am sure they will put their heads down and work out a better business model. That would be good for all—including the investors.”

SEBI is pushing fund companies to face the new reality which Mr Vaidyanathan goes on to articulate as follows: “The challenge for the fund industry thereafter is to find out where the scale will come from. According to me it will come from simplicity, distribution and technology.” According to him, fund companies must offer simple products with low volatility based on asset allocation, distribute the products through large distributors and ensure that their operations are backed by the best technology, which reduces cost. “That may also mean that those who were not serious would exit.”

Ever since SEBI has changed the business model of the fund companies by changing the way mutual funds are sold, equity funds are losing money. This has led to market speculation that SEBI may partially relax the regulations, allowing for some upfront commissions. “A large number of people (mainly the sponsors) keep checking whether SEBI will revisit the policy of scrapping entry loads because they argue ‘it has not worked’.”

However, when asked, Mr Vaidyanathan asserted with a simple: “No. That is a closed chapter.”
Having changed how the funds are being distributed, SEBI is changing how the funds would be created. In the first couple of decades of growth of mutual funds, fund companies have launched almost similar products, which confuse investors. SEBI is already making some changes in the fund-approval process which will change this. “It is their business, but I guess funds will have to change. One of the things we are asking funds to do is to explain clearly how fund A is different from fund B. This has to be done for all the funds that are being sold today no matter when they were launched. They have to redo their Key Information Memorandum (KIM).”

One of the key issues for the fund industry is that while SEBI has banned upfront commissions for mutual funds, insurance companies were pushing their products, especially Unit-linked Insurance Products (ULIPs) with hefty upfront commissions.

The fund industry has been quietly complaining that this has tilted the playing field against them. Since banks and financial institutions make easier money selling other products, why would they sell mutual funds, goes their argument. Mr Vaidyanathan counters this as a myth. “People confuse between upfront and trail. Business models based on upfront will die. Irrespective of how the dispute between ULIPs vs mutual funds works out, the writing on the wall is clear. Upfront commissions and entry loads will become zero. It is a matter of time. Therefore what it leaves us with is trail commissions. There is nothing to match the attractiveness of trail commission of mutual funds because the trail is on the total kitty, not like the upfront commission on a single product. But that means everybody has to think long term, especially after upfront commissions are gone. Until now nobody was thinking long term.”

Revision in Fees for ARN Registration& Renewal for distributors

AMFI vide their  circular no. 35P/MEM-COR/3/10-11  dated May 19, 2010 has revised the ARN Registration and Renewal Fees wef 1st June 2010 for all category of distributors as mentioned in their appended circular.  As mentioned in yesterday's mail, the certification and examination  will be conducted by NISM wef 1st June 2010 as against AMFI.  The validity period of certification for non-individuals will be three years.

 

 

35P/MEM-COR/3/10-11                                                May 19, 2010
 
Dear All,
 
Re : Revision of fees – ARN Registration/ Renewal
 
The AMFI Board at its Meeting held on May 5, 2010 has decided to revise the fees for registration/ renewal of ARN with effect from June 1, 2010 as follows :-
 

Entity	ARN Registration Fees	ARN Renewal Fees
Banks/ NBFC/ Institutional Distributors	500,000	250,000
Public Ltd. Co.	500,000	250,000
Pvt. Ltd. Co.	50,000	25,000
Partnership Firm	25,000	12,500
Societies and Trusts/ HUF	25,000	12,500
Post Offices	15,000	7,500
Proprietorship Firms	10,000	5,000
Corporate Employees	5,000	2,500
Individual/Senior Citizens	5,000	2,500

 
It is further decided that the validity of ARN issued with effect from June 1, 2010 would be three years in case of non individual applicants. In case of individuals/ corporate employees, the validity period shall be computed from the date of receipt of application till the date of validity of AMFI/ NISM certificate.
  

 

 

3G auction ends, Govt to get Rs 67,719 cr windfall

ITS call For 3rd Generation

3G auction ends, Govt to get Rs 67,719 cr windfall
NDTV Correspondent & Agencies, 19 May, 2010

Auction for 3G licence ended on Wednesday, with bids for pan-India licence touching Rs 16,751 crore that ensures the government a revenue of Rs 67,719 crore.

No single bidder bid for a pan-India license and Delhi emerged the most valuable circle at Rs 3,317 crore, followed by Mumbai at Rs 3,247 crore. Among the major bidders, Idea paid nearly Rs 5,765 cr for 11 circles, Bharti paid Rs 12,290 cr for 13 circles, Vodafone paid Rs 11,617 crore for 9 circle while RCom paid Rs 8,583 crore for 13 circles.

The Winners:
Delhi: Vodafone, Bharti, Reliance Communications at Rs 3317 cr   
Mumbai: Reliance, Vodafone, Bharti Airtel at Rs 3247 cr   
Maharashtra: Tata Com, Idea, Vodafone at Rs 1258 cr  
Gujarat: Tata Com, Vodafone, Idea at Rs 1076 cr   
Andhra Pradesh: Bharti, Idea at Rs 1373 cr
Karnataka: Tata Telecommunication, Aircel, Bharti at Rs1580 cr
Tamil Nadu: Bharti, Vodafone, Aircel at Rs 1465 cr
Kolkata: Vodafone, Aircel, Reliance Communications at Rs 544 cr
Kerela: Idea cellular, Tata Telecommunications, Aircel at Rs 312.5 cr
Punjab: Idea Cellular, Reliance Communications, Tata Telecommunications, Aircel at Rs 322 cr
Haryana: Idea Cellular, Tata Telecommunications, Vodafone at Rs 222.6 cr
MP: Idea Cellular, Reliance Communications, Tata Telecommunications at Rs 258.4 cr   
Rajasthan: Reliance Communications, Bharti, Tata Telecommunications at Rs 321 cr   
U.P. (West): Bharti, Idea Cellular, Tata Telecommunications at Rs 514 cr   
U.P (East): Aircel, Idea Cellular, Vodafone at Rs 364.6 cr   

Today was the thirty-fourth day of the bidding. The government’s revenues from the 3G spectrum are much higher than its original estimates and even surpassed its revised estimates by a hefty amount. The 3G proceeds will help the government to bridge its fiscal deficit.The government had budgeted revenues of Rs 35,000 crore from sale of air waves for 3G and Broadband Wireless Access (BWA) put together.
The auction for Broadband Wireless Access (BWA) spectrum would begin soon after the 3G auction is over. The 3G auction had commenced on 9 April, 2010 and there were nine bidders in the fray for the slots of 3G spectrum on the block. The government auctioned three slots in 17 telecom service areas and four slots in the remaining five states of Punjab, Bihar, Orissa, Jammu and Kashmir and Himachal Pradesh.
BSNL and MTNL received spectrum outside the auction process, but the price would be determined by the auction price.
The third-generation spectrum allows subscribers to download hi-speed data and stream videos on mobile telephones. The successful bidders would be allotted air waves in September after the spectrum is vacated by the defence forces.
The 3G spectrum saw aggressive bidding by the telecom players as India remains one of the fastest growing mobile-services market by subscribers. With the addition of over 20 million new users in March, the mobile subscriber base in the country has jumped to 584.32 million customers. The number of telephone subscribers in India, both wireless and wireline combined, increased to 621.28 million at the end of March-2010 from 600.98 million in February 2010, thereby registering a growth rate of 3.38 per cent. With this, the overall Tele-density in India reached 52.74.
Telecom players hope that the 3G spectrum will ease capacity constraints and also increase the revenue per user, which has been falling due to intense completion in the sector.
For broadband wireless access, there are 11 operators are in the fray. The reserve price for BWA spectrum has been fixed at Rs 1,750 crore and only two slots of 20 MHz each are on the block.