The India telcos minister provided further updates on NTP-11 today. These are just the drops from Mr. Kapil Sibal to get a feeling of Analysts and Industry on his new proposals and may be changed before the final draft is presented for approval.
The Good in New Telecom Policy 2011:
Relaxation of M&A guidelines may not lead to immediate consolidation, in our view, as most new operators still intend to grow organically. The spectrum of new operators (1800 MHz) may not be as lucrative for incumbents; Spectrum sharing may also not be positive for incumbents, as we believe it could give an alternative to new entrants that could have otherwise consolidated.
Our Analysis on proposed M&A in NTP 2011
Although sentimentally positive immediate consolidation may not take place, but incumbents may have bargaining power to raise tariffs. With potential auction of 700MHz/ 2.1GHz spectrum, incumbents may not be interested in spectrum of new entrants (1800MHz) nor their poor subscriber quality who hurn based on Tariffs.
Was Spectrum allocated for Trading or to provide Telecom Services ? If you look at Mr. Kapil Sibal’s recommendation, it looks like it is meant for trading. New entrants would like to lease their spectrum, which they have il-legally amassed in the 2G Scam. However, incumbents may not be interested as they would be giving new operators chance to survive. Sibal’s recommendation will not see the light at the end of the fiber
License Renewal every 10 years – A Negative
Without clarity on the license renewal fee, we view reduction of the license renewal timeline to 10 years as negative, as uncertainty remains on how much operators would have to pay every 10 years for license renewal. Operators need to pay significant amount for
license renewal every 10 years now vs. every 20 years earlier.