×
Home Companies Industry Politics Money Opinion LoungeMultimedia Science Education Sports TechnologyConsumerSpecialsMint on Sunday
×

New telecom policy: short on details, but investors come calling

New telecom policy: short on details, but investors come calling
Comment E-mail Print Share
First Published: Mon, Oct 10 2011. 11 36 PM IST
Updated: Tue, Oct 11 2011. 10 59 AM IST
The draft National Telecom Policy has proved to be less harmful than what markets have feared it to be. Firstly, the policyis silent on issues (Free roaming, high broadband speeds in new telecom policy) such as charges on additional spectrum, license fee and re-farming of the spectrum.
With government coming under fire for the 2G-spectrum scam – at a time when it is pressed to generate more revenues -, analysts feared that it would propose watertight rules for charges on additional spectrum usage, hurting companies like Bharti Airtel.
While the draft-policy did not throw much light about, the telecom minister said that the government might allow ‘pooling, sharing, later trading’ of the spectrum. The move, if implemented, will help telecom companies use spectrum more efficiently and save on costs.
The policy aims to migrate to ‘one nation-one license’ regime. Treating the whole country as one circle will do away with roaming charges. While this could have a material impact on the telecom companies, the draft policy did not elaborate much on the how it will treat the STD calls. STD calls constitute around 22% of call volumes. Overall, the new telecom policy is expected to have limited or negligible impact on the telecom firms in current and next financial year.
Srishti Anand, telecom analyst at Angel Broking says: Nothing big has come out. The spectrum re-farming has just been mentioned. It is not clear when and how the spectrum will be linked to market prices. There won’t be any immediate impact on telecom companies.
She adds: In case of roaming charges, telecom companies, on an average, earn 8% of their revenues from roaming. 50% of roaming revenues come from international calls. So overall, the revenue loss from the doing away with roaming charges could work out to be 3-4% of the revenues.
One major positive for the industry is that the New Telecom Policy proposes to formulate ‘exit methods’ for existing operators, which could lead to consolidation and reduction in competitive pressures. The policy also proposes to de-link licenses from spectrum. (Highlights of draft National Telecoms Policy 2011)
That will help telecom firms efficiently use the networks and makes entry easier for new mobile operators.
While the telecom minister aims to finalize the policy by the end of this year, the proposed changes have cheered investors. The three listed bigwigs – Bharti Airtel, Idea Cellular and Reliance Communications - clocked smart gains of over 1.7% each as the Minister announced the policy.
Comment E-mail Print Share
First Published: Mon, Oct 10 2011. 11 36 PM IST
More Topics: Markets Update | Shares | Sensex | Nifty | BSE |