Milestone - Billion Dollar Bids seen at Spectrum Auction.

Nine firms will compete in a widely watched airwaves auction in that would pave way for the introduction of high-speed third-generation mobile services in the world’s fastest-growing mobile market.

one of the world’s biggest such auctions over the past few years, the Indian government hopes to net revenues of nearly $8 billion from 3G and a near simultaneous auction of broadband wireless access (BWA) spectrum.

The 3G auction starts from 9 April, 2010 and two days after it closes, the BWA spectrum auction will begin.

India’s top six private telecoms operators are bidding for 3G spectrum across all 22 zones, while three others including Etisalat’s Indian telecoms venture will bid in select zones.

Due to limited number of slots for 3G — three each in most of India’s 22 telecoms zones and four in some — and high competition for the scarce spectrum, analysts expect each winning bid to be more than $1 billion for a pan-India licence, or even touch $2 billion, compared with a base price of $780 million.

Heavy investments on licences and then on building networks could further stretch the winning firms’ financials.

It is expected market leader Bharti Airtel, Vodfone Essar and Tata Teleservices, which is backed by Japan’s NTT DoCoMo, winning spectrum in a majority of the zones.

Eleven firms, including US chipmaker Qualcomm, will bid for BWA spectrum, for which two slots in each of the 22 zones are up for grabs.

The base price for a national BWA licence has been set at around $390 million.

India is a late adapter of 3G and is the biggest economy to not have these premium services in wide scale yet, though the state-run telecoms firms have 3G services in some zones.

Winning operators have to deposit the money within 10 days of the auction, but they will be awarded spectrum only in September, meaning there is no immediate opportunity to make money out of new services such as faster Internet on mobile phones and video calling that 3G would facilitate.

A study by telecoms researcher Wireless Intelligence estimates India will have 60 million 3G users by 2013, which is less than 10% of consultancy Gartner’s forecast of 771 million total mobile phone users by then.