Markets: Eerie calm

Markets: Eerie calm

it is not clear when market sentiment can change; as in the past, it can be quite sudden.
At a turn and yet not

At a turn and yet not

RBI could be tempted to cut policy rate to support growth at its bi-monthly review.

‘Tariffs should have been raised yesterday’

Dec 21 2012, 20:08 IST
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SummaryTelcos in India are grappling not just with fierce competition or high customer acquisition costs, but a tough regulatory environment in which the soaring cost of spectrum is pressuring their balance sheets.

Telcos in India are grappling not just with fierce competition or high customer acquisition costs, but a tough regulatory environment in which the soaring cost of spectrum is pressuring their balance sheets. As the market leader, Bharti Airtel has coped fairly well, though the September 2012 quarter saw its eleventh consecutive y-o-y decline in net profits. Also, the telco’s Africa operations are yet to turn profitable. The one-time charge for the spectrum it holds beyond 4.4 Mhz and 6.2 Mhz could cost it an estimated R6,000 crore. Moreover, it will need to cough up an additional amount when it vacates the more efficient spectrum in the 900 Mhz band and bids for it again. Sanjay Kapoor, who heads the Indian and South Asian businesses, tells Anandita Singh Mankotia & Rishi Raj that spectrum is not being priced right and that a one-India, one-licence plan needs to be thought through, before it takes off. However, Kapoor is optimistic that consolidation in the industry could kick up tariffs.

With the auctions for 1800 Mhz spectrum not really a hit since four circles didn’t find takers and of the remaining 18, excluding Bihar, the spectrum got sold at the reserve price, would you say that consolidation has begun?

There were certain structural defects in the sector, in the sense of too many players, and the market had become too fragmented. We believe consolidation probably first began in the minds of the subscribers as we saw the top three or four operators continuing to hold sway over the market, leaving newer players with little market share. The second aspect related to consolidation was the cancellation of the licences, of players who entered the market in 2008, by the Supreme Court. The third phase seems to have begun now with some new operators reducing their play to a few circles. The fourth and final phase will start when, within those few circles, they restrict themselves to a few cities.

Do you think Arpus have bottomed out?

Arpus are a function of reported numbers, which have a lot of multiplicity and duplicity in them. As consolidation sets in, the real numbers will emerge, the denominator will shrink, driving up the Arpus.

You have been talking about the need for raising tariffs, when do you see this happening?

They should ideally have moved up yesterday. Having said that, the problem currently has less to do with headline tariffs and more to

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