Foreign telecom operators, who are aspiring to enter the Indian telecom space through the 3G licence auction route, should not participate in the auction process at present as their growth prospects are limited by regulatory and market factors, said a report.

They should keep themselves out of the race for the time being and wait for a better time, suggests a recent report by research firm Strategy Analytics.

"We believe that foreign operators should adopt a wait and watch approach as the licensing and pricing policies will most likely change," said Rahul Gupta, author of the report.

Foreign operators like AT&T, Deutsche Telecom, NTT Docomo and others who have been eyeing the domestic market for a long time now finally got a chance to enter world's fastest growing telecom market but looking at the current 3G auction policy, it is advisable for them not to participate in the race, it said.

The report '3G Scenario in Emerging Markets' by the firm says the government's 3G policy is not suitable for the foreign players at present due to a number of factors like pricing structure and strict timeline.

"The opening of 3G licensing process to global players would have been well received initially but on further review the complexity of the process, the upfront payment requirements and with very tight timeline proposed will limit international investment," said the report.

Recently the communications minister A Raja said that the 3G auction process would be completed by October.

Firstly, the upfront payment of almost $500 million without any guarantee of being able to get licence will frighten many of the operators, it added.

The report said that smart international operators would simply wait until 3G licensing installs and enter the market, later picking up the licence at much more reasonable rate with less uncertainty.

Secondly, the timing of auction could prove a major hurdle for them as it is virtually impossible to get FIPB approval within the deadline.

Recently the communications minister A Raja said that the 3G auction process would be completed by October.

It takes several months to get through the FIPB process due to high level of bureaucracy. This is another factor thatwe would hope that Indian regulators and relevant ministries would re-examine prior to the announcement of the auction if they are serious about opening up of the bidding process to major foreign players, the report added.