The memory of over-priced 3G licence acquisitions in Europe some 10 years ago has all but faded, but recent spectrum allocations worldwide have once again left us questioning how new licensees expect to generate returns on investments, says Total Telecom in its June edition.

Last month the world watched as prices in the Indian 3G spectrum auction crept up, concluding with the theoretical cost of a nationwide licence at $3.61 billion, almost five times the base price set by the government. No operator succeeded in securing pan-Indian spectrum: top spender Bharti Airtel’s bill came in at $2.63 billion for spectrum in 13 circles. Meanwhile, Germany’s four mobile operators agreed to pay a total of $5.48 billion for spectrum across four bands.

Increasing demand for both mobile capacity in emerging markets and mobile data services in the developed world is not being matched by incremental revenue growth, which suggests operators may once again be paying over the odds for spectrum.

In India, for example, monthly blended ARPU stands at $4 and the average revenue for new customers comes in 20-30% below that, says Coleago Consulting, which has charted comparative prices paid. “This raises concerns for future revenue growth and the profitability of operators, particularly given that the new market entrants have increased competitive intensity leading to erosion in margins, says managing consultant Ravi Nagarajan.

Vodafone’s $2.49 billion bid was the second highest in the Indian auction and came just days after the telco’s strong full-year results were overshadowed by a 2.3 billion pound impairment charge against its Indian operations. Vodafone also emerged as the highest bidder in Germany’s licensing process, winning 800 MHz, 2 GHz and 2.6 GHz spectrum at a cost of $1.78 billion; $1.51 billion of that was for 800 MHz spectrum.

The 800 MHz block raised $4.47 billion in total , or $0.91 per MHz per head of population, according to Coleago. This compares with $1.18/MHz/pop for the 700 MHz spectrum auctioned in the US in 2008, rising to an average of $4.17/MHz/pop in the major US cities.

This relatively low price stems in part from the restrictions applied to licences. Winners are required to use the spectrum to provide mobile broadband coverage in rural areas first, followed by small towns, before they are allowed to roll out networks in larger cities.