Just ahead of New Telecom Policy, Bharti Airtel and Ideal Cellular witnessed a sharp fall with higher trading volumes despite the overall bullish market condition. While the former tumbled 3.34 per cent to Rs 354.8, the latter slumped 4.5 per cent to Rs 90.30 on the BSE. Both, however, recovered from day's low levels. While Idea Cellular trading volume jumped to 17.66 lakh shares against its two-week average of about 7 lakh shares. Bharti Airte's volume surged over threefold to 7.07 lakh shares against its two-week average of 2.46 lakh shares.
The telecom policy, scheduled to be announced on Monday, has cost implications for telecom players. Among other things, the policy is likely to make roaming free. While this is good news for subscribers, operators will end up losing about Rs 500 crore each annually on account of this.
Points of concern
According to analysts, operators get about 10 per cent of their revenues from roaming services. Though operators are expected to oppose this policy or increase local tariffs to compensate for the loss, it will be up to the telecom regulator to figure out the finer details.
The other major item is extending mobile number portability (MNP) to intra-circle level. This means consumers moving from one circle to another will be able to carry their number with them.
At present, MNP is permitted only within the same circle. Once again, this is good for subscribers but from the operators point of view it means additional expenditure in ramping up their networks.
Security mechanism
In addition, the policy is likely to make it mandatory for operators to set up security mechanism to enable monitoring by law enforcement agencies. The operators will be required to set up testing labs to scrutinise core network equipment. According to industry estimates, this will cost about Rs 10,000 crore.
The policy is also likely to delink spectrum and licences, which means operators will not get spectrum bundled with licence any more. Under the current rules, operators can get up to 4.4 Mhz of spectrum by paying Rs 1,650 crore along with the licence. Though the new policy will not specify the new price regime, operators will have to cough out more for future spectrum allocation.
But the policy is likely to have some good initiatives which will benefit the operators. For example, Government will permit spectrum pooling, sharing and trading under specified conditions for optimal utilisation of spectrum. This will help operators earn additional revenues by leasing out capacity to each other.
Proposals
Abolish roaming charges; Make MNP available intra circle; Allow spectrum trading, pooling and sharing; Move towards unified licence regime with single pan-India licence; Delink spectrum and licence; Exit policy for operators who want to surrender licence; To mandate operators to set up systems in place to secure network; and Create a special purpose Telecom Finance Corporate for facilitating investments.