Will Govt. refund Capex of around $6.5 billion to Videocon, Uninor, S Tel, Etisalat, Loop, MTS & TTSL?

Telecom Lead India: Will India Government refund Capex spent of around $6.5 billion to Videocon, Uninor, S Tel, Etisalat, Loop, MTS and Tata Teleservices (TTSL)?

The refund of their investment in telecom network is important as the government is currently planning to refund spectrum fee paid in 2008 to companies who have won in the 2012 auction. What about other mobile operators and their investments in India.

The Videocon and Uninor brands will disappear from a part of the Indian telecom market after the flopped 2G auction that generated Rs 9,400 crore for the Government against the Rs 40,000 crore target.

Both Videocon and Uninor may consider shifting a part of their telecom networks to circles where they will continue. But they have invested heavily in resources and branding in affected circles as well.

S Tel, Etisalat and Loop Telecom have already discontinued their telecom operations.

Earlier Ovum said operators — Uninor, Loop, MTS, Etisalat, S Tel, Videocon, TTSL and Aircel — spent 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.

Out of this Aircel is not an affected company. There is no clarity about MTS India’s curative petition. Uninor bagged six circles against its earlier plan to focus on 9 circles – Andhra Pradesh, Bihar & Jharkhand, Gujarat, Mumbai, Maharashtra & Goa, Kolkata, West Bengal, UP East and UP West.

TTSL did not participate in the bidding process in November.

Of eight companies whose licences were cancelled, only three companies — Idea Cellular, Videocon and Telenor — participated and won spectrum in the auction held last week.

The 2G controversies have already affected Capex plans of mobile operators. Earlier Ovum forecast that 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.

Read TelecomLead.com article appeared in February 2012 based on Ovum report.

Since Uninor and Videocon are curtailing their presence, it will affect their earnings potential and manpower. Uninor has 42 million customers, around 14,700 workforce, presence in 396,700 retail outlets and 1,767 distributors.

According to Economic Times, the Department of Telecommunications has again sought legal opinion on the matter of refunding entry fee to telecom operators whose licences were cancelled by the Supreme Court, after an EGoM decided to adjust fees of only those companies who win spectrum in the auction.

Baburajan K
editor@telecomlead.com