122 2G licenses issued to nine telecom operators by the UPA government in January 2008 have cancelled by India's Supreme Court. These licenses were issued by former Telecom Minister A. Raja, under an unusual first-come-first-serve policy, with an arbitrary cut-off date set. In addition, penalties have been imposed on telecom operators. According to The Hindu, Swan Telecom, Unitech Wireless and Tatas have to deposit Rs five crore each as penalty, while Loop Telecom and Shyam Sistem have to deposit a penalty of Rs 50 lakh. Their licenses are valid for four more months, and the Telecom regulator TRAI will have to suggest a means by which these players will either be able to exit through mergers and/or acquisition, or pay an additional fee to retain licenses. More on the judgement at NDTV. Given that there are third party rights involved, with many of these companies (especially Tata Docomo, Idea Celullar, Shyam Sistema and Uninor) already have a significant customer base. Our Take On What Happens Next & What This Means For Telecom In India - Impact on Incumbent Players: Incumbent players will benefit most, but those incumbents whose licenses have been cancelled will most likely pay more and retain their stake. Tata Teleservices (specifically Tata Docomo) and Idea Cellular are likely to participate in the auctions or repurchase to retain their licenses. Remember that Tata Teleservices put most of its eggs in the GSM basket (Tata Docomo) and scaled down their CDMA operations. The companies that benefit most from this…
