Stock prices of the listed mobile operators have halved in recent times. This couldn’t have happened at a worse time.
Coming up in January are the 3G and Broadband wireless access (BWA) auctions. With rules and dates having been changed frequently over the past 15 months, it does look like we will finally have the auction with the playing field firmly in favour of the incumbents and loaded against new entrants.
But, given that India has almost a dozen operators and just four slots for 3G, it is possible that there could be aggressive bidding in some circles. Operators want the licence not as much for the data potential but for the additional spectrum which will allow them to expand their voice services more cost-effectively.
With a depressed stock price and a government looking to fill its coffers to meet social spending targets, the future for the market leaders does appear to be challenging. They have to win at all cost. There are more of them than the available slots. So, someone will have to lose. And prices could go high. There probably won’t be much joy in victory given the capital needs that the 3G rollout will cost.
Amidst all this, the CBI is investigating the allocation of the 2G spectrum to a favoured section of operators, and the matter is also in the courts. So, uncertainty over the past still prevails.
So, what next?
Continued tomorrow.
