2G verdict: Why Airtel is a better bet than Idea

The Supreme Court verdict canceling 122 2G licenses yesterday has stunned the telecom sector, to say the least.

So which are the most-affected companies? According to anEdelweiss report, the license cancellations will affect 22 circles of Uninor, 21 cicles of Loop Telecom, Videocon and Sistema-Shyam each, 15 circles of Etisalat-DB, six circles of S Tel, nine circles of Idea Cellular and three circles of Tata Docomo.

For a clearer picture on what circles of which companies are being affected, take a look at the chart below.

So, what’s the future like?

Well, now with the cancellation of the licenses, interested operators will have to apply for a new license and participate in an auction that is expected to be held in the next four months.

Idea, in particular, is expected to apply for a license and bid for spectrum in the auction.

However, the uncertainty over the status of its licenses in Punjab and Karnataka and the likely expenditure for acquiring spectrum in seven circles will be drag on the company.

That is also one of the reasons why the brokerage prefers Bharti Airtel over Idea. Also, the Supreme Court decision is likely to benefit existing players like Airtel, since they will be in abetter position to hike tariffs.