Loop Telecom to shut down: Can India stop mismanagement?

Telecom Lead Asia: Indian telecom industry is on the
verge of collapse. India cannot wait till April 13, Friday to hear from the
Supreme Court about the future of the telecom industry. India has a president,
prime minister and telecom minister to address the needs of the industry. Loop
Telecom (the Ruias-owned?) may be shutting services shortly, while Etisalat and
S Tel have already exited. Uninor and MTS India are impatient. Vodafone is
knocking the door. Responsible ministers need to talk.


Media reports suggest that there will be huge impact on
employment in India.


Loop Telecom’s GSM services across 13 of the company’s
telecom circles have been notified that the company would be opting out of the
market soon and hence they would have to move to another operator.


Loop Telecom has issued notices to 6,000+ of its
subscribers across 13 of their telecom circles, namely – Assam, Bihar, Gujarat,
Haryana, Karnataka, Kolkata, Madhya Pradesh, Maharashtra, North East, Orissa,
Punjab, Rajasthan and Uttar Pradesh (West), according to media reports.


The Supreme Court scrapped 2G licences of Tata
Teleservices (3 circles), Videocon (21), Uninor (22), Idea Cellular (9), S Tel
(6), Swan (13), Etisalalt Telecom (15), Loop (21) and MTS
(21). The revenue of the new licences holders in the 2G spectrum case is around
Rs 1,700 crore in Q2 2011-12. India will miss a part of this due to
mismanagement. The total revenues of these operators were Rs 1693.4 crore for
the second quarter ended September 30, 2011. It includes four percent of the
total revenue earned by Idea Cellular.


These operators contributed around 3.39 percent of the
total revenue earned by all the network operators (excluding TTSL) in Q2 FY


The 2G license cancellations may not cause a huge
disruption in telecom services as the number of licenses granted post
2008 make up only 5 percent of the subscriber base in India.


During the Barcelona Mobile World Congress, telecom
minister Kapil Sibal promised that Indian telecom operators will not exit the
telecom market. But India created a number of unhappy mobile giants.


With 5% marketshare, license cancellation will not affect
mobile services significantly


Among other license losers, Uninor’s market share is 5.68
percent with 36,306,865 subscribers and Videocon’s market share is 0.85 percent
with 5,442,883 subscribers. S Tel has a market share of 0.55 percent with
3,549,381 users. Loop Mobile has 3,236,381 subscribers with 0.51
percent market share. Etisalat’s market share is 0.26 percent with 1,670,086
subscribers. While MTS India has around 15.01 million subscribers, the
subscribers of Tata Teleservices are 83.49 million. Idea Cellular in these
affected service areas has over 6 million subscribers.


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