Stormy Times For India’s Telecom Sector Ahead How It Will Impact On Subscribers?

So mobile bubble bursts in India! With Supreme Court’s verdict regarding cancellation of 122 licenses for 2G mobile services given in 2008 by the-then Telecom Minister A. Raja, Indian telecom sector will see worst nightmare in coming days while incumbent operators will have their position stronger than ever in last 4 years.

Stormy Times For India’s Telecom Sector Ahead How It Will Impact On Subscribers?

Supreme Court comments that 2G spectrum in 2008 was given away in a “totally arbitrary and unconstitutional” manner. SC also imposed penalty of 5 Cr to Etisalat-DB, Unitech Wireless and Tatas and Rs 50 lakh to Loop and Shyam-Sistema respectively.

The impacts of this decision are huge and can put the whole telecom sector in emergency as all of these operators are in business for some years and they have employees and too many contracts with vendors, network operators and other companies. Overall they have a good number of subscribers base also.

It proves that there was some mishap during the spectrum & license allocation in 2008. It also says that UPA Govt. did not work properly to get more earning by selling mobile licenses, which was earlier denied by present telecom minister Kapil Sibbal (zero loss). Blaming NDA Govt does not work here.

New Operators who grabbed licenses in 2008 are in big trouble. In 2008 Uninor, Sistem/MTS, Loop, Videocon, Tata Docomo (GSM) and Cheers emerged as new players. SC says with the old license operators can operate for 4 months. During this period TRAI and DoT will come up with some decisions for fresh issue of licences.

It is expected some operators like Cheers, Videocon, Loop and STel who did not invest much on business may leave the sector completely or partially but new Telecom Policy is still atleast 5 months away. But may be TRAI will come up with some rules to exit the market.

‘Shocked’ Uninor reacts that they are unfairly treated and expects ‘the authorities to ensure that our 36 million customers, 17500 workforce and 22,000 partners are not unjustly affected.’

Idea Cellular cites ” They have been unnecessarily been caught in this situation of cancelled licenses, just because the licenses were granted in January, 2008 which was as late as 18 months from the date of application. In fact, Idea Cellular had filed a Petition in TDSAT inter alia seeking to isolate our application from the 2007/08 applications, and thus requesting for priority under the then DoT policy of “first come first serve”.

Happier than ever incumbent operators – Airtel and Vodafone is in a position to have the most benefits. Idea Cellular is already in trouble with double licenses in certain circles as they acquired Spice Communications. Idea and Tata have issues with 5 and 3 circles respectively which I believe will be managed easily.

Reliance Communications clears the fact that they obtained license in 2001 and it will not have any impact on them.

This verdict hits the foreign investments in India as some of reputed MNC like Telenor, Etisalat, Sistema, BaTelCo invested in these new mobile operators. It simply goes very bad impression to overseas market. More importantly Russian Govt controlled Sistema and UAE Govt controlled Etisalat are also on the list, which will certainly impact on foreign direct investments in India.

End of low tariff era in India? For last few weeks incumbent players are singing chorus to hike the tariff. With new bidding of 2G spectrum, these old players can grab more spectrum as well as it gives more financial burden to new operators which may lead to tariff hike.

New operators like Uninor and Sistema-Shyam will be in the sector for sure, as they already invested a lot and have a stable subscriber base. But if they have to pay for new bidding the immediate impact will be on workforce to cut jobs.

Subscribers of new operators may have to migrate to other incumbent players and as usual has to be part of higher tariff rates.

Whatever it is coming, it will simply hit the ‘aam janta’ with tariff hike, problems faced with porting out and job loss while Govt will ‘just’ watch out incumbent players squeezing money from people.

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141 Comments on "Stormy Times For India’s Telecom Sector Ahead How It Will Impact On Subscribers?"

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ralph
ralph
February 7, 2012 2:40 am 2:40 AM

@RDB
uninor claims they have invested 14,000 crore. the network is good, not great but good. but their plans are great!

Amit
Amit
February 6, 2012 6:14 pm 6:14 PM

Kanna :What if TT or we start an online petition favouring Uninor/MTS to TRAI and SC?

Thats a gud idea.. but lets c

Amit
Amit
February 6, 2012 6:13 pm 6:13 PM

Arjun Chandrashekar :@Saurabh I’m Not Having Confirmation That Videocon Will Starts Service Again If Their License Got Cancelled. And One Thing I’m Not Having Hope On Videocon. Atleast I’m Having Hope On Uninor, Aircel and Docomo

Why Aircel is in picture? I guess there is not license cancellation regarding Aircel…

Kanna
Kanna
February 6, 2012 4:48 pm 4:48 PM

What if TT or we start an online petition favouring Uninor/MTS to TRAI and SC?

Arjun Chandrashekar
Arjun Chandrashekar
February 6, 2012 4:06 pm 4:06 PM

@Saurabh
I’m Not Having Confirmation That Videocon Will Starts Service Again If Their License Got Cancelled. And One Thing I’m Not Having Hope On Videocon. Atleast I’m Having Hope On Uninor, Aircel and Docomo

Amit
Amit
February 6, 2012 3:18 pm 3:18 PM
Abhishek Dutta :I believe,,,,Uninor & MTS will continue their services as it is and it wont affect on Indian telecom industry as they have already paid huge amounts to the Goverment to get the licence. May be they can pay the penalty charges. However, they should take care of their customers and do the fair judgement towards us. Hence, i just look forward that soon other New NTTs(telcos) should come to India and give their services, like- AT&T, Verizon wireless etc. I agree with you. Now it hight time so invite some very big names, so that we can get… Read more »
dskushwaha
dskushwaha
February 6, 2012 2:51 pm 2:51 PM

@Saurabh
….
….
What Raja did was charity…….

I don’t agree with you in using the word ‘charity’ if he has got percent of money form the business.

Saurabh
Saurabh
February 6, 2012 2:24 pm 2:24 PM
Dapru R Wangru : No xtra money would be required if we extract all the money from A.Raja and other politicians….from swiss accounts and maldives (new hideout after swiss wikileaks) Don’t make nonsense comments. Raja is not holding large chunk of money. It’s the corporates who sold their stake at a premium. For ex: Unitech Wireless got license and spectrum for Rs.1651 crores and sold 60% stake of their company at around Rs.6120 crores to Telenor. So money went into Unitech’s account not Raja’s account. Raja may had got some percent of it but not all. Similar things happened with… Read more »
Saurabh
Saurabh
February 6, 2012 2:15 pm 2:15 PM
Pratik : Arjun Chandrashekar : @Raghu Telenor Will Leave Unitech and Makes It’s Own Network in India. But Surely Videocon, STEL, ETISALAT Will Get Lost From Telecom Industry they cant take it as wholly owned subsidiry of telenor as 100 % foreign investment is not allows yet in telecom sector. they have to have indian partner for continuing operations. @Prateek, Yes, they can’t hold 100% but they can buy Unitech’s stake (32.75%) and by divesting and floating an IPO in the primary market of the same between 26-49%. Vodafone also bought out Essar stake few months back and now planning… Read more »
Abhijith
Abhijith
February 6, 2012 2:08 pm 2:08 PM

@asfak
you can continue your business dont worry of it with in 4month there ill be a solution . . Dont worry brother

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