India will allow operators in its crowded cellular sector to share and trade airwaves and will also unveil rules to allow carriers to exit the industry, Telecoms Minister Kapil Sibal said as he unveiled a new telecoms policy.
Under the new policy, cellular spectrum will be priced on a market basis and will be separated from the allocation of licences, Sibal said in rolling out a draft policy that follows a licensing scandal that may have cost the government up to USD 39 billion in lost revenue.
"We will audit spectrum and use of spectrum," he said.
Sibal said generating revenue for the government was not the priority during a media briefing where he announced several initiatives but gave few details.
"In achieving the goals of national telecoms policy 2011, revenue generation will play a secondary role. Our vision is to have broadband on demand," he said.
For carriers, whose share values and margins have been battered by intense price competition that makes calls in India among the cheapest in the world, the policy is a mixed blessing that also requires them to provide free roaming across the vast country.
Allowing carriers to exit the industry could ultimately lead to consolidation.
Shares in two of the biggest listed players, Bharti Airtel and Idea Cellular, were initially lower on Monday before closing higher. Bharti ended nearly 2.5% higher, Idea gained 2% and Reliance Communications ended 1.7% higher.
The broader market closed 2% higher. Sibal's briefing was still in progress when the market closed.
India decided to overhaul its decade-old rules for the industry after alleged rigging in the grant of licences in 2007/08 came to light late last year, forcing the then-telecoms minister to resign. A probe into the case is on and police have charged 14 people so far, including the former minister.
With more than 850 million mobile subscribers, India's mobile market trails only China's. But the 15-player market is in the throes of a vicious price war that broke out in the second half of 2009, squeezing profitability.
While mergers and acquisitions rules are expected to be relaxed to help consolidation in the crowded market, Sibal has said the government will not let the number of players in any telecoms zone fall below six. India allocates mobile phone licences by zone, of which there are 22.
Highlights:
-One Nation-One License to mean removal of roaming charges
-Revenue generation will play a secondary role in NTP 2011
-Vision is to have broadband services on demand
-NTP 2011 to increase availability of spectrum
-Want India to become hub of telecommunication
-New policy will aim at making India hub of telecom equipment
-Will put in place a skill development strategy
-BSNL, MTNL will continue to play imp role in penetration
-Mission is to have special coverage of remote, rural areas
-Aim to have 100% tele density by 2020
-Affordable and reliable broadband on demand by 2015
Other proposals
-300 MHz spectrum to be made available by 2017
-Aim to make 500 MHz spectrum available by 2020
-Need seamless delivery on converged policies
-Convergence of svervices will cover voice, data, video, internet, VAS
-To permit resale at retail level
-Will delink licenses issuances & spectrum allocations
-Spectrum to be made available at market valuations
-Seek TRAI recommendation on license framework
-Will allow trading, sharing, pooling of spectrum
-Will enact a separate spectrum act
-New spectrum act to look into spectrum pricing -
Will encourage refarming of spectrum
-Will work on giving infra status to telecom sector.
Source: www.moneycontrol.com
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