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Sunday, Nov 28, 2021
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telecom players

Wrong Code

SC leaves telecom firms cold. It’s hedge bets till new 2G auctions.

Wrong Code
Sanjay Rawat
Wrong Code
outlookindia.com
-0001-11-30T00:00:00+05:53

Six Questions That Will Be Asked

  1. What happens to subscribers of these companies?
    The cancelled licences will be valid for four months during which subscribers can find a new operator.
  2. Will companies like Telenor and Etisalat lose their investments?
    They’ll make losses but can sell physical infrastructure. They can re-enter through JVs, once TRAI finalises norms. Some may exit market in toto.
  3. How much money can the government make from auctioning 2G spectrum?
    Close to 3G auction levels of `60,000 crore, but 2G spectrum will not now be a scarce commodity.
  4. Will any of the companies appeal the SC verdict?
    The government has accepted the order. Some firms may buy time by appealing to a full SC bench.
  5. Will banks write off exposure to affected licencees?
    Some non-performing assets are possible, but banks would have factored in this situation as licences were controversial from
    the beginning.
  6. How will the judgement hit the “India story”?
    FDI in telecom will definitely take a hit, and the government will have its work cut out to convince investors.

***

It may be just coincidence, but the measured reaction to the February 2 verdict of the Supreme Court—when it scrapped the 122 telecom licences issued by ex-Union minister A. Raja in January 2008—has a lot to do with another landmark judgement delivered just 12 days before. The SC having established ‘impartiality’ in the Vodafone tax case, telecom players perhaps found it easier to digest the enormous implications of its verdict in the 2G case.

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