Telecommunications - Service

Indian telecom sector has been severely impacted by the constant policy paralysis and regulatory overhang. In February 2012, the Supreme Court of India cancelled 122 telecom licenses issued in 2008.

India's total telecom subscriber base has also declined by 25.97 million to 895.51 million in December, as per TRAI report after telecom operators contin... more »

Indian telecom sector has been severely impacted by the constant policy paralysis and regulatory overhang. In February 2012, the Supreme Court of India cancelled 122 telecom licenses issued in 2008.

India's total telecom subscriber base has also declined by 25.97 million to 895.51 million in December, as per TRAI report after telecom operators continued disconnecting inactive SIM cards.

The Supreme Court ordered for auction-determined pricing for spectrum going forward. TRAI then announced a base price for the available spectrum as ruled by the apex court which was 10 times more expensive than the price paid earlier by the operators. The Empowered Group of Ministers then lowered the reserve price by around 20%, which was still expensive for the debt-ridden telecom operators especially at a time when margins had squeezed and some of them were even struggling to turn profitable.

The 2G auctions held during 12-14 November, 2012, witnessed a lukewarm response. There was no bidder for spectrum in the CDMA space. In the GSM space, out of the proposed 390 MHz of spectrum sale, only 35% was sold in the auction process. Key circles like Delhi, Mumbai, Karnataka and Rajasthan witnessed no takers.

The government could garner only Rs 94 billion as compared to the target of Rs 400 billion. Even the Rs 94 billion of payment will not be received at one go by the government. The companies will pay it in installments. Government is now planning to mop-up more money by re-auctioning the unsold spectrum before the end of FY 2013. hide «