Impact to be positive; tough to estimate revenue: Bajaj

Telecom analyst Kunal Bajaj explains to CNBC-TV18 that he expects the impact of the retainment of 2.5 Mhz in the 900 Mhz on refarming to be positive and it would be difficult to estimate the revenues that would accrue to the government.

Below is an edited transcript of the analysis on CNBC-TV18 Q: The fact that 2.5 MHz will be allowed to be retained at a market-discovered price, what are the financial implications for the four private companies in this list? Kunal Bajaj: Apart from the financial implications, the decision offers comfort from an operational perspective. The two big components of the financial aspect were in terms of the capex as the equipment used for 900 MHz could not be upgraded for use for the 1800 MHz and will have to be replaced.
The second aspect is that operating at the 1800 Mhz would also require more towers to offer the same level of coverage. So, allowing the retainment of just 2.5 MHz of spectrum in the 900 MHz band will allow the incumbent operators to shuffle around the existing equipment and fix the gaps in coverage. So, it definitely will have an extremely positive impact on the financial and operational aspects. Q: What are the estimated revenues for the government? Kunal Bajaj: That's really difficult to say since the auction is not going to happen for at least another year and to arrive at an estimate of funds, the financial scenario will have to predicted. Until there's a roadmap for the use of the 400 - 700 MHz spectrum in India, 900 MHz will remain the most valuable spectrum available.
So, I think really what's going to determine the pricing in 2013 or whenever the auction takes place, is the availability of the funds and the economic health of the operators at that time.