Delays hit operators’ wallets

25 Jun 2012

Indian cellcos affected by the Supreme Court’ order to cancel 122 concessions are facing heavy losses as the government delays the upcoming auction of 2G spectrum. As previously noted by CommsUpdate, the Empowered Group of Ministers (EGoM) was due to meet last Thursday to decide on a base price for spectrum, but the meeting was cancelled as the finance minister and presidential hopeful Pranab Mukherjee, who headed the EGoM, was due to step down from his position shortly in the run-up to the presidential election. The decision is crucial to the future of the telecom sector, with a number of operators threatening to leave the market if proposals from the Telecom Regulatory Authority if India (TRAI) and Department of Telecommunications (DoT) are accepted. Investor confidence in the subcontinent’s telecom sector is at an all-time low, and the delays are worsening the situation for those cellcos waiting to renew their cancelled licences. Russia’s Sistema – which operates through joint venture Sistema Shyam Teleservices (SSTL), also known as MTS India – is reportedly losing up to INR75 million (USD1.3 million) a day, according to the Business Line. Videocon, meanwhile, is losing around INR50 million a day, whilst a spokesperson for a third cellco, Uninor, said ‘we remain dependant on Telenor as our shareholder to keep funding us each month to keep operations going. Longer uncertainty places Telenor in a difficult situation.’