There were wide ranging reactions from telecom sector analysts to the Supreme Court's verdict in the 2G case.

It is good news for established incumbent operators and in the short term there is likely to be some increase in tariffs, said Mr C.S. Benoy, Director, ICT Practice, Frost & Sullivan, South Asia and Middle East.

The auction route may raise initial capex investment, which in turn may lead to increased cost of telecom services, he added.

Cancellation of 122 2G licences could cost India Inc $8-10 billion annually, said Mr Prashant Singhal, Partner at Ernst & Young Global. It will create uncertainties over the next four months and have a ripple effect on the entire telecom value chain including passive infrastructure providers and OEMs.

Amidst the uncertainty, there is a silver lining in that the judgment has put pressure on the Government to close the matter within four months after which one can look forward to a stable policy, said Mr Hemant Joshi, Partner, Deloitte Haskins & Sells.

Operators who have not rolled out operations yet and do not want intend to might get a good exit option, he remarked.

LONG-TERM PERSPECTIVE

“It is going to help the global telecom industry as a whole,” said Mr Benoy.

Some global companies that missed the race earlier could invest in the Indian telecom industry; one might also see the entry of some mature multinational players which will bring in healthy competition and better quality of service, he said.

Mr Singhal was of the opinion that investor confidence will wane, significantly impacting FDI inflow across various sectors. “The sector will witness substantial erosion in foreign investments by the leading international operators.”

“The issues which arise from the verdict, unless resolved quickly, will create lot of uncertainty which could again have a negative impact on foreign investment in India,” said Mr Joshi.

SECTOR OPERATIONS

The decision would impact only a small portion of the telecom industry's operations, said Mr Gaurav Dixit, Sector Head, Telecom, at CARE Ratings.

The affected players have a market share of 5-7 per cent, he said. The impact will be marginal especially in the case of some of the more established players who have new 2G licences in some circles.

Tata Teleservices which has three licences in Assam, the North East and Jammu & Kashmir does not have much contribution yet from these places.

For Idea, the circles for which licences might be revoked account for less than 1.3 per cent of revenues, said Mr Dixit.

There could be an impact on how the sector is viewed by banks, said Mr Joshi. There may be limits put on exposure to this sector, he added.

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