Telecom probe: Allocation of 2G spectrum frozen

In a crucial fallout of Central Bureau of Investigation's (CBI) probe into the alleged 2G spectrum allocation scam, work on allocation of spectrum to all existing operators - including Bharti Airtel, Vodafone Essar, Idea, Reliance Communications among others - has stopped at the Department of Telecom (DoT), reports CNBC-TV18's Siddharth Zarabi.

Telecom companies, which had reached desired subscriber levels across the country will have to wait for additional allocation of spectrum.

There is no clarity yet on when the process will be resumed as that would depend on the CBI's investigation.

The CBI recently raided the DoT's office and is looking into irregularities regarding licence fees and allocation of spectrum. The CBI's investigation is based on grounds that the DoT did not allow more players to buy licences and sold licences to existing players at below-standard rates.

During the raid, the CBI took possession of original files of the DoT, which may impact its operations.

Earnings growth may be affected

Bharti Airtel has confirmed to CNBC-TV18 that it is awaiting additional spectrum in ten circles - the details of which are still awaited - though it clarified that it won't be affected much because 56% of its subscriber growth was coming from rural areas were networks in terms of spectrum usage are not heavily loaded.

One player that could be impacted is Reliance Communications, which was on an aggressive subscriber acquisition spree since it launched its 2G operations.

Telecom companies' earnings growth could thus be affected, going forward, as capacity addition in spectrum is put on hold and current capacity in many circles may need an upgrade.

The impending 3G auctions, however, won't be affected as a result of the latest development.