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Advisory firm KPMG believes that recent development of 2G trial court summoning key telecommunication chiefs under the additional spectrum allowance case will not have any major impact on business operations of the sector.
Advisory firm KPMG believes that recent development of 2G trial court summoning key telecommunication chiefs under the additional spectrum allowance case will not have any major impact on business operations of the sector but it may consume top management bandwidth on regulatory issues.
"It will take a lot of bandwidth from the senior management rather than focusing on the markets pace and enhancing their profitability and the other business parameters," Jaideep Ghosh Telecom Partner, KPMG told CNBC-TV18 today in an interview.
In a further blow to the beleaguered telecommunication industry, the 2G telecom trial court today issued summons to Sunil Mittal, Chairman & MD Bharti Airtel and Ravi Ruia Vice-Chairman, Essar Group, and Ex-Chairman Hutchison Essar, Shyamal Ghosh, Former DoT Secretary and Asim Ghosh former MD, Hutchison Max Telecom. The trial court also named Bharti Cellular, Hutch Max and Sterling Cellular as accused companies in the additional spectrum allocation case.
Below is the verbatim transcript of Jaideep Ghosh's interview
Q: Bharti Airtel has said in the statement today that the spectrum issued under the government policy of 2002 was also issued to other telecom operators including Mahanagar Telephone Nigam (MTNL) and Bharat Sanchar Nigam (BSNL).What sort of impact do you foresee on account of this latest development?
A: First point, I think additional spectrum was allocated to certain other telecom operators, in addition to these three named once. I keep on saying that telecom industry is now almost synonymous with regulatory and legal issues. I think there are lot of regulatory aspects, lack of clarity etc and I think this will be one more additional item in that list.
From a business perspective, I think there are enough challenges that telcos are facing in on the cost and revenue side and also lower uptake of data.
Q: In terms of business continuity the difference really in this case and the case for the 2008 licensees was that those licenses itself were quashed while that is not the case, this is just about some additional spectrum and whether it was rightly allocated. Do you see this in some ways hampering the ability of these two companies in terms of their investment and operational and management plans?
A: Only thing I can say now, is that a lot of top management bandwidth is going on these regulatory matters. This one is naming the key executives and the chairman level and the Ex key executives in case of Hutchison Max. This will again take a lot of bandwidth from the senior management rather than allowing them to focus on the markets pace, enhancing their profitability and the other business parameters. So, to that extent the although licenses have not been quashed, lot of management bandwidth will go in and to that extent it would be slightly disrupting. But again as I said, I do not see any impact on the market in terms of business disruption at all.
Bharti Airtel stock price
On April 23, 2014, Bharti Airtel closed at Rs 339.10, up Rs 3.80, or 1.13 percent. The 52-week high of the share was Rs 373.50 and the 52-week low was Rs 274.50.
The company's trailing 12-month (TTM) EPS was at Rs 14.07 per share as per the quarter ended December 2013. The stock's price-to-earnings (P/E) ratio was 24.1. The latest book value of the company is Rs 135.70 per share. At current value, the price-to-book value of the company is 2.50.
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