The telecom tangle

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February 25th, 2012 Tarun Chaturvedi

“Sorry you seem to have dialled a wrong number”; “Please check the number you have dialled”; “The dialled number does not exist” ……… and the list goes on and on.

For long, subscribers to cellular services in India have got used to hearing such automated messages the moment they make an error in dialling the number. The service provider took great pains to make it known to the subscriber that he has dialled a wrong number. But now it seems a large number of service providers have themselves dialled a wrong number. Surely for foreign telecom majors such as Telenor, Etisalat, Sistema etc., India has been a wrong number and they have already announced exit plans.

The above is a direct consequence of the judgement and is surely not the only consequence. The collateral consequences will now start and the dangerous ramifications of the judgement will be felt by a large number of sectors including but not limited to consumers, corporate, banks, telecom equipment vendors etc.

The least affected will be the large number of consumers who were availing services from providers whose license has been cancelled. According to industry estimates such consumers would total around 50 million. With number portability the woes of such consumers would be greatly reduced.

The worst fallout of the decision is the dent in investor confidence when it comes to the foreign players. In the aftermath, there is no doubt that the foreign investor will now think twice before entering a regulated sector in India. The foreign players have a valid argument – they argue that the apex court has passed the decision of cancelling the licenses whilst the corruption case is still to be decided (read A Raja and the CBI case). If the corruption case, as made out by the government, fails (going by the past rate of success in getting convictions for the politicians in corruption cases, failing is more likely), will the apex court reverse its decision of cancelling the licenses. Further, they argue that even if the licenses were issued by causing a loss of exchequer, the court could have asked the existing players to make good such notional loss. Cancellation of the licenses has created total confusion in the industry. No body is clear as to what will happen to the gains which have already accrued to the India players in the course of selling the licenses to the foreign players. The Damocles sword is still hanging over the equipment vendors and banks that have exposures to this industry. It is fast appearing that the practical roll out of the decision is beset with problems.

There is every possibility that at the end of the day we may feel that the hon’ble lordhips at the apex court in their quest to deliver solutions to a issue problem have created more problems than they have managed to resolve.

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