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2G verdict: What happens now that licences revoked?

TRAI chief says decision will affect 5 per cent of market. The Supreme Court’s decision to revoke 122 telecoms licences will likely impact less than 5 per cent of the country’s mobile subscribers,the chief of the sector regulator told a television channel. The affected subscribers can be transferred to other mobile operators,J S Sarma,chairman of […]

Written by Agencies | Mumbai | Published: February 2, 2012 11:57:07 am

TRAI chief says decision will affect 5 per cent of market.

The Supreme Court’s decision to revoke 122 telecoms licences will likely impact less than 5 per cent of the country’s mobile subscribers,the chief of the sector regulator told a television channel.

The affected subscribers can be transferred to other mobile operators,J S Sarma,chairman of the Telecom Regulatory Authority of India (TRAI),told ET NOW,after the court ruling.

India had 893.84 million mobile connections as of December end.

Following are analysts’ comments:

JAGANNADHAM THUNUGUNTLA,HEAD OF RESEARCH,SMC INVESTMENTS AND ADVISORS LTD,MUMBAI

Players like Bharti Airtel and Idea Cellular with popular brands and strong balance sheets will be clear beneficiaries because they can take advantage of this situation and increase market share.

Foreign players like Systema and Etisalat,which are government controlled companies… those governments will start feeling apprehensive about doing business in India and hence,drawing foreign direct investment would be little more challenging for the country.

DEVEN CHOKSEY,CHIEF EXECUTIVE OFFICER,KR CHOKSEY SECURITIES,MUMBAI

The Supreme Court wants the government and the ministry to come to a conclusion and clear the licence ruckus because this entire controversy has been terrible.

The market is viewing it positively and will only recover because the earlier licences which have been cancelled will be re-issued after the revised guidelines come out and the monetary considerations will be swapped against the new licences.

RISHI SAHAI,DIRECTOR AT CONSULTANCY FIRM COGENCE ADVISORS,NEW DELHI

For foreign investors,it is a very bad news. What mistake did they do? They partnered with Indian companies,invested lots of money and followed the process of that time.

The natural consolidation that one would have expected to happen in the sector,which would have weeded out the weak players,is out of the way now. Foreigners would simply walk away from that.

This creates very bad impression about the government in the overseas markets.

JAIDEEP GHOSH,PARTNER AT KP NEW DELHI

This bring in more uncertainty into the sector,which has already been battling with many issues. In the near term,this will impact the sector’s business and the ecosystem. This also has implications on foreign investments.

For large incumbents like Bharti Airtel and Vodafone,the verdict is kind of neutral to positive. This may help them acquire new customers as well as extra spectrum,which has always been an issue for the sector.

KAMLESH BHATIA,RESEARCH DIRECTOR,GARTNER,MUMBAI

This is one step closer to tranparency in policy-making. This decision will lead to some of the weaker players moving out of the business,and the market would be left with only serious and financially strong players. The foreign players will not really take this favourably,for obvious reasons,but I think the attempt is to bring in some level of transparency in decision and policy-making.

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