Magazine
| Ezine |
| Current Issue |
| Magazine-Archive |
| News |
| News - Archive |
| Advertise with Us |
| Subscribe |
| Buy Latest Issue |
Subscribe Newsletter
| All's not lost with TRAI's recommendation |
| Friday, 11 May 2012 | |
|
Telecom operators have threatened to double call rates and quit India, if the government accepts the sectoral regulator’s recommendations on spectrum auction. But few analysts have played down the impact of the Telecom Regulatory Authority of India (TRAI)’s recommendations. Citibank claims the hit could be minimal and operators might not have to make dramatic increases in call rates to nullify the effect of high base prices. “It is worth noting that telcos are advocating an 80 percent reduction in TRAI’s proposed base price. Our analysis shows because of deferred spectrum payments, hikes required are staggered and small ie, two percent annually,” Citibank stated in a report. The report stated operators would have a strong case for call rate increases, and the high reserve price could restrict their bidding intensity, as well. Apart from high base prices, TRAI also gave a provision to telcos to make deferred payments of spectrum fee. “We believe, based on current recommendations of deferred payments, the net present value for spectrum payouts constitutes roughly one-third of the total payments,” stated a report by Morgan Stanley. The report lauded clarifications sought by the department of telecommunications (DoT) on the recommendations. After TRAI’s response to these clarifications, the matter would be referred to the Telecom Commission. The final decision would be taken by an empowered group of ministers. DoT questioned TRAI’s proposal to auction only one slot of five megahertz, when there would be more slots after refarming of spectrum, another recommendation of the regulator itself. “We feel the underline apprehension herein could be to ascertain if there are any chances of default by any of the telcos due to higher spectrum charge outgo, in case the bids are won at current or higher than the recommended reserve prices,” Morgan Stanley said. Some brokerages, however, have panned the recommendations and their effects on telecom stocks. “We believe this will inhibit participation from any potential new entrant or from the operators whose licenses have been cancelled as per the Supreme Court order,” said Motilal Oswal. It would pinch established players too, as the brokerage calculated an incremental annual outlay of Rs1,140 crore for Bharti and Rs1,090 crore for Idea. Refarming of spectrum has been a controversial issue. As operators have cited technological issues to its implementation, some say it could even invite litigation. “Based on discussions with sector participants, the incremental cost of migrating to 1,800 MHz will not be significant, as the tower density is already very high, especially in big cities,” said Suresh A Mahadevan and Varun Ahuja of UBS. –Business Standard |
| < Prev | Next > |
|---|
© Copyright 2007, ADI Media Pvt. Ltd.-Telecommunication, Broadband & Networking Magazine Publishers