SC grants slight reprieve, but TRAI proposals unsettle market

25 Apr 2012

India’s Supreme Court has extended the deadline for the re-auction of the cancelled 2G licences by three months, despite a petition from the Department of Telecommunications (DoT) requesting a full year to prepare for the tender. The two-member bench said: ‘In our view, it will be just and proper to partially accept the averments made … Accordingly, the time specified for conducting the auction and grant of licences is extended up to 31 August 2012.’ The extension gives the sector regulators some breathing room to conduct the auction, but falls short of its proposed auction date of March 2013. The affected cellcos will be allowed to continue operations until 7 September 2012, giving those providers that have chosen to exit the market time to wind-up operations.

In response, the DoT has said it is hastening the auction process and is awaiting final recommendations from the Telecoms Regulatory Authority of India (TRAI), due 15 May. However, as reported by CommsUpdate yesterday, the TRAI’s proposals included price hikes for spectrum upping the minimum cost by tenfold in some areas. The recommendations provoked an outcry from industry representatives. Consequently, share prices of the country’s telecoms firms fell across the board, regardless of their relation to the 2G licence scandal. According to Reuters India, shares in Bharti Airtel dropped by 7.5% to their lowest level since July 2010, before closing out 1.7% down. Idea Cellular saw prices plummet by 9.8% but also recovered slightly, ending 4.2% down. Sistema, which operates on the subcontinent as MTS India and was one of the cellcos to have its concession revoked, saw the value of its London-listed shares drop by 4%.