NEWDELHI: The telecom industry on Thursday reacted with a sense of shock and disbelief at the Supreme Court’s decision to cancel 122 telecom licences.
About 60 million mobile customers of the telecom operators, whose 2G spectrum licences have been cancelled, are left with two options. They can either continue with the existing service provider with the hope that the operator will bid and win spectrum in the proposed auction or move to a new telecom operator. The latter looks more likely to happen.
“Mobile number portability will be put to full use,” says Siddharth Balakrishnan, a Mumbai-based telecom analyst. This could also lead to higher telecom tariffs due to less competition. Benoy C S, Director, ICT Practice, Frost & Sullivan, South Asia & Middle East, says “This verdict is good news for established incumbent operators and in short term we are likely to see some increase in tariffs.” Bharti Airtel, Vodafone and Reliance communications along with two state owned telcos are likely to share the subscribers.
However, there are bigger concerns for the sector due to the SC judgment. Analysts termed the development as a major setback to inflow of foreign direct investment in the telecom sector. It also puts the banking sector with exposure to telecom sector in a major crisis.