Ruling may affect subscribers, dampen investment spirit
New Delhi, February 2
The judgement which has far reaching consequences impacts not just the telecom story, which had been touted as one of India’s biggest success stories but also alter the way business is done here. The immediate impact is that 122 licences given to mostly the new operators have been cancelled which will lead to fresh auction of spectrum and with competition decreasing, an imminent increase in call rates. Around 5 per cent of consumers will be impacted by this cancellation.
It is basically the entry of newer players that had brought call rates to rock bottom leading to an explosion in telecom subscribers across the country. The government had also argued that it was not auctioning spectrum to keep telecom services cheap and encourage competition. Now, if the call rates go up too much then consumers will be unhappy and the government may again face criticism.
The cancellation of licences will definitely hurt investor sentiment which is already quite low. In the last year and a half, with scams breaking out and subsequent slowdown in decision making in the government, corporates, both foreign and domestic have been uneasy in such an environment.
Following the cancellation of licences, companies like Uninor have said that they were just following the government policy as it was and are being penalised. Once the sanctity of a contract with the government comes into question at a later date, it will definitely deter investors who become uncertain of the future.
While business is shocked at the events, it is also a fact that crony capitalism has been dealt a blow and companies will now think that dodgy deals can be penalised.
Facing the heat
n Unitech Wireless n Loop Telecom n Videocon Telecom n Etisalat DB Telecom n S Tel Ltd n Sistema Shyam Teleservices n Idea Cellular n Tata Teleservices
n Will lead to an increase in call rates for more than 90 crore mobile subscribers n
Might change the way corporates do business n
Will hurt investor sentiment which is already quite low n
While business is shocked, crony capitalism has been dealt a blow
n Will lead to an increase in call rates for more than 90 crore mobile subscribers
n Might change the way corporates do business
n Will hurt investor sentiment which is already quite low
n While business is shocked, crony capitalism has been dealt a blow