SC verdict on 2G scam: Advantage Bharti Airtel, Idea

Prabhudas Lilladher has come out with its report on telecom space.

The Supreme Court cancelled all the 122 2G licences granted in 2008, affecting operations of 11 service providers. The operators are allowed to continue operations for the next four months as TRAI determines the transition mechanism for subscribers of these operators and also arrives at an appropriate market price for the licences. Companies intending to continue operating will have to pay the market price to do so.

The road ahead: The SC has asked TRAI to make fresh recommendations on allotment of licences within four months. TRAI has said it prefers the auction route for issuance of these licences and may release a consultation paper to determine the process. The Govt will have to act on these recommendations within one month. Operators are likely to ask for a review of the judgement.

Incumbents to benefit: With the primary impact on new entrants, incumbents like Bharti and Idea (in its 13 established circles) will benefit from moderation in competitive intensity. Some of the affected operators may not pursue fresh licences, while those who do may follow the incumbents

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