By Telecom Lead Team:
The supreme court order on 2G spectrum is set to impact around $1.5 billion
telecom Capex plan of licence holders such as Uninor, Loop, MTS, Etisalat, S
Tel, Videocon, Idea Cellular, TTSL.
Recently, Ovum forecast that Indian mobile operators such as
Uninor, Loop, MTS, Etisalat, S Tel, Videocon, TTSL and Aircel will be spending around
$1.2 billion in Capex in 2012. Idea is expected to spend around $800 million in
Capex for both for 2G and 3G. However, Aircel does not fall in the category of operators who were allotted license in 2008
If TRAI goes ahead with fresh 2G license auctions in the
next 4 months, these operators may / may not get spectrum. Plus, there will be
further delay in telecom investment in India. The SC order has the potential to
affect investment sentiment in the country.
According to Ovum, these operators spend around $2.1 billion
in 2008, $1.7 billion in 2009, $1.1 billion in 2010 and $1.32 billion in 2011
to augment telecom network.
Major telecom equipment vendors such as Ericsson, Nokia Siemens Networks, Huawei, ZTE and Alcatel-Lucent will be affected if there is any delay in capital expenditure by mobile operators.
The Supreme Court has cancelled the 122 2G
spectrum licences granted by former telecom minister A Raja.
Major lending banks including SBI, IDBI and PNB have exposure to nine of these operators. Their loss is estimated to be Rs. 20,000 crore. However, the impact is minimal as their exposure is only a fraction of the total telecom exposure. Banks are not worried as some of the lenders are already established leaders who will continue to be in business. The bank guarantee will lapse as the rollout itself has not taken place. However, the banks have asked the government to refund the license fee.
Uninor, Loop, MTS, Etisalat, S Tel, Videocon, Idea, TTSL to
face music
The Supreme court cancelled the licences on the ground
that they were issued in a “totally arbitrary and unconstitutional”
manner.
The apex court imposed a fine of Rs five crore each on three
telecom companies, which offloaded their shares after getting the licenses.
The court directed the Telecom Regulatory Authority of India
(TRAI) to make fresh recommendations on allocation of 2G licences. A bench
comprising justices G S Singhvi and A K Ganguly said the allocation of spectrum
will be done through the policy of auction within four months.
The SC asked the government to take steps on the
recommendations of TRAI within a month.
The 122 licences were given by the telecom ministry under
the guidance of Raja for over Rs 9,000 crore, while 3G auctions fetched Rs
69,000 crore. There were major allegations that the telecom ministry
released 2G spectrum at this price due to influence of certain corporate in
2008.
Raja issued 122 licences in January 2008 on first-come
first-serve basis. Uninor got 22 pan India licences, Loop 21, Sistema-Shyam
(MTS India) 21, Etisalat-DB 15, S Tel 6, Videocon 21, Idea Cellular 9 and Tata
Teleservices 3.
