Eleven telecom operators have received a severe blow as the Supreme Court’s order of cancelling 122 2G telecom licences means de-congestion of players in the telecom market. But, brokerages say this judgment will mould the fortunes of many telecom players differently as incumbent players take advantage of a situation where the exit of newer players would not only result in less competition but also availability of more spectrum.
Nine of Idea’s licences have been cancelled and including the licences with Spice Telecom, this number stands at 13. But according to brokerage firms Idea may not take too much of a hit since close to 90 percent of its revenues come from the 13 circles it bagged before 2008. They say, Idea will have to opt for an auction-based market price for spectrum in the nine circles where licences have been cancelled.
incumbent players like Bharti Airtel , Vodafone, Aircel, and Reliance Communication have unscathed from SC's verdict
For Uninor, however, the going could get tough, as all 22 of its licences stand cancelled. Not only will promoter Unitech not get back the Rs 1,600 crore already paid for licences, it will have to pump in more money for additional licences. Also, there is a possibility that Unitech’s foreign telecom joint venture partner Telenor will shift this liability of higher licence cost, or cancellation and business exit charges, on Unitech.
Videocon, Loop and Sistema have lost 21 licenses each. Tata Tele has lost three licences, S Tel has lost six licenses and Etisalat DB has lost 13 licences. These companies have not only lost the money already paid for spectrum, but their entire telecom business is hanging by a thread.
But large market players like Bharti Airtel , Vodafone, Aircel, and Anil Ambani’s Reliance Communication have escaped unscathed. Brokerages point out that these companies received GSM licences before 2008. Also they are most likely to benefit from the spectrum consolidation that this judgment is likely to give rise to.
Watch the full report on CNBC TV 18 video: