"It will be most difficult for pure 3G operators. Otherwise, I feel there will be initial years of losses, which is bound to be there in every business. But as we started late, we have a great advantage."

New 2G licencees such as Unitech, Datacom and Loop Telecom could be targets for foreigners, although Indian policy at present does not allow two 2G licence holders to merge their licences for three years from issue.

Billions of dollars of investment in upgrading or building new 3G network would spell more opportunity for global network gear makers such as Ericsson, Nokia Siemens, Motorola and Chinese firms Huawei and ZTE Corp.

INTERNATIONAL EXPERIENCE

Overseas, 3G has failed to deliver on the hype that often led to frenzied licence auctions.

Hong Kong's Hutchison Whampoa has struggled since launching 3G services in Britain in 2003, and Vodafone ended up selling its underperforming Japanese 3G unit to Softbank in 2006.

In South Korea, SK Telecom Co and KTF Co have been offering 3G services for more than a year, but high costs associated with subsidies for new phones and marketing has been a worry for 2G market leader SK.

Singapore's three operators -- Singapore Telecommunications Ltd, StarHub Ltd and MobileOne Ltd -- rolled out their commercial 3G services in early 2005, but are yet to turn profitable on their 3G investments, analysts say.

But the COAI's Ramachandran said India's size and growth potential gave it advantages over others. If 10 per cent of users migrated to 3G, that would make a good business case, he said.

... contd.