Idea Cellular, one of the nine telecom companies which faced the Supreme Court axe last Thursday, seems to have a reason enough to feel cheated.
The company had operations in 11 circles in 2006, when it applied for licences for another nine circles. But the Department of Telecommunications processed its applications with the new telecom operators which was as late as one and a half years after it had applied for the same. This resulted in the cancellation of its licences along with those of the other eight companies.
The company now finds itself robbed of its spectrum in seven of the nine cancelled circles.
Lamenting the cancellation the company issued a statement saying,”Idea Cellular has unnecessarily been caught in this situation of cancelled licences, just because the licences were granted in January, 2008 which was as late as 18 months from the date of application. In fact, Idea Cellular had filed a Petition in TDSAT inter alia seeking to isolate our application from the 2007-08 applications, and thus requesting for priority under the then DoT policy of ?first come first serve?.
While the company said that seven service areas currently has over six million subscribers and these account for just about 5% of Idea’s cumulative Capex, 4% of its revenue, and are Ebitda loss making circles, analysts feel that the loss will be painful for the operator as most these circles of Orissa, west Bengal, Kolkata, Assam, NESA, Jammu and Kashmir and Tamil Nadu are category C circles with low penetration levels which makes them lucrative markets for future growth.
Agrees Prashant Singhal of E&Y said, ?Someone like Idea is not a new operator, it had a fairly large foot print in the country and it was simply expanding its operations. So if the government decided to club its applications with the new oeprators, it didn?t really have a choice.?
While Tata Tele too has lost licences in three circles, its CDMA operations are no longer an area of focus for the company and it has a very small subscriber base here.
However, the company’s 3G customers won?t be affected as the company can continue to operate 3G services without the 2G spectrum and licence.
Meanwhile Idea said, “It is unfortunate that a serious incumbent operator like Idea Cellular is being made to suffer due to this cancellation of licences, despite being fully compliant at each stage of the licence allocation process.
As per information available from the media, we understand that licence holders are allowed to continue operations for the next four months and an auction will be conducted. We will study in detail the SC judgment and explore all possibilities to protect our investment.?
