Impact will be geography, circle specific: E&Y

Bharat Bhargava, partner-telecom, E&Y explains to CNBC-TV18 that the impact of the retainment of the 2.5 Mhz in the 900 Mhz during refarming of spectrum will be specific to geographies and circles.

Below is an edited transcript of the analysis on CNBC-TV18 Q: What do you think this implies for the four private and the two government-owned telecoms? Bharat Bhargava: Allowing the retainment of 2.5 Mhz is definitely a step in the right direction. Now the companies have to also provide capacity. The spectrum of 2.5 Mhz does not provide any significant capacity to the operators.
So, unless their capacity-needs are met by the spectrum in 1800 MHz that they hold, they will still need more tower-sites which depends on whether they operate in rural or suburban areas which will entail higher requirement for tower-sites. So, there will be this capex and the associated opex. Q: Within the four private operators, will the impact be specific on individual telecoms? Bharat Bhargava: I don't want to comment on the impact on any operator in specific. It is important to note the impact specific to geographical regions and circles. Though it brings down capex and opex, it doesn't really take away the need for more tower-sites and reconfiguration. Q: Let me ask you to rank the financial impact on four private-sector telecoms? Bharat Bhargava: This is clearly very dependent on geography. The capacity that the 900 Mhz provided is taken away. The impact depends on how much 1800 Mhz is used for capacity, on the footprint and the density in the urban, suburban and rural areas. Q: Do all the government announcement and measures augur well for the pricing of spectrum, health of the industry and government revenues? Bharat Bhargava: I have three points to make here. Number one, no recommendation is going to make everybody happy. Operators are at different levels with respect to the time of entry, revenue, profitability and spectrum holding. So, it is highly unlikely that any recommendation will make everybody happy.
Number two, allowing the retainment of 2.5 Mhz in the 900 Mhz. The announcement also says something about the amount of spectrum that needs to be had in the 1800 Mhz band if everybody has to be given that amount of spectrum. Clearly not all that spectrum is available at the point at which it needs to be given out to 900 Mhz operators..
Number three, allowing 2.5 Mhz, although it may not be adequate from a capacity perspective, certainly reduces the capex, opex and write-offs for operators.
So, it may not be as bad as perhaps some of us would like to believe and certainly no decision can make everybody happy.