Telecom Prospects brighten due to favourable policies in 2013

Dec 30 2013, 20:23 IST
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Telecom sector now looks stable and seems back on its feet with initial investment proposal of over Rs 11,000 cr received in 2013. Telecom sector now looks stable and seems back on its feet with initial investment proposal of over Rs 11,000 cr received in 2013.
SummaryDepartment of Telecom is hoping to annouce the new M&A guidelines.

Uninor, which bought spectrum afresh after their licences were cancelled, increasing call rates and mobile charges.

Call rates of old telecom players almost doubled this year from 2012. New operators kept rates at a lower level to attract customers and build their base.

"The year 2013 has been a revival year for the telecom sector. The 2G auction in 2012 saw the exit of several foreign and indigenous players much to the joy of existing players who are now looking for market capitalisation and consolidation," KPMG Advisory Services Partner Jaideep Ghosh said.

"2013 was challenging because if you have to abruptly shut down your business, a comeback is never easy," Videocon Telecommunications CEO Arvind Bali said. The company has been the fastest-growing service provider in terms of subscriber additions during the past five months.

Infighting among telecom players and differences within the government were highlighted after the Telecom Regulatory Authority of India's recommendations on spectrum valuation and auction reserve price.

Sistema Shyam Teleservices, which operates under the MTS brand, alleged the TRAI favoured GSM players by not recommending auction of CDMA spectrum and suggesting that part of the 800 MHz CDMA airwaves be used for GSM technology.

"We still await clarity on the pricing of 800 MHz band spectrum from TRAI so that we could get on with the job of driving our voice-enabled data centric strategies. It would be most ideal if auctions for all spectrum bands i.e., 800 MHz, 900 MHz and 1800 MHz, could happen concurrently in early 2014," MTS India CEO Dmitry Shukov said.

The DoT has approached the TRAI about four times in the past six months for suggestions on a minimum price for CDMA spectrum. The regulator today issued a consultation paper on determining the valuation of CDMA spectrum for auction.

Another controversy erupted with the TRAI recommending a uniform spectrum usage charge (SUC) of 3 to 5 per cent across the industry instead of the current rate of 3 to 8 per cent. The SUC is levied annually as a percentage of revenue.

The DoT estimates the TRAI's recommendation on SUC would lead to a minimum loss of Rs 3,738 crore over 20 years just on the renewal of six licences belonging to Airtel, Vodafone and Loop Mobile, which are due to expire in 2014.

While the SUC recommendation would bring relief to existing mobile service providers, it would burden holders of wireless broadband (BWA) spectrum such as Mukesh Ambani-led Reliance Jio Infocomm,

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