The Supreme Court has cancelled 122 telecom licenses issued on or after January 10, 2008. The supreme court held that the licenses were granted in an arbitrary and unconstitutional manner.
As of now The Supreme Court has asked the Telecom Regulatory Authority of India to make fresh recommendations on the grant of 2G licenses, through auctions. A Bench comprising Justices Mr G.S. Singhvi and Mr A.K. Ganguly in effect said these licenses will be valid only for four more months.
The recent decision could have an impact on over 70 million subscribers. Most of these are from from Uninor, Shyam Sistema (MTS) since they are operational in almost all of the 22 / 21 circles respectively. The decision would also have an impact on S Tel, however it has licenses for only 6 circles. Loop, Etisalat, Videocon have limited operations or are yet to commence operations.
Supreme court ruling yesterday could lead to some serious concerns for new telecom operators as well as employees engaged with these companies. The ruling has already started building some uncertainty for employees associated with these operators, as well as people engaged in the ecosystem that supports the telecom operators.
Impact on Jobs:
There may be an overall impact on about 10,000 jobs or more if the ecosystem encompassing the telecom business is considered. MTS and Telenor, would be most impacted considering the impact of The Supreme Court ruling on their business. They have license’s to 21/22 circles respectively and have launched their operations in almost all the circles.
In reaction to the decision – some sentiments from Telenor’s end as reflected in the media also looks at exiting the Indian market as an option.
We have been seeing telecom jobs fading away during 2011 considering some amount of restructuring by leading companies like Airtel, Tata Teleservices. Recently Reliance Communication also announced a restructuring for its wireless business. The present decision may lead to more job losses, and therefore would increase availability of professionals with experience in telecom business.
Telecom sector was a hot and happening sector for a long time and recently till a few years back when these new operators were picking up people from incumbent operators at fancy raises – at times leading to a jump of about 50 % in salaries when you changed jobs.
What else ?
TRAI may allow all companies, including incumbents and older players, and as well as new firms to participate in the auction for 540 MHz of 2G airwaves that will be freed up after cancellation of all licenses issued since January 2008
Since, the ruling talks of fresh auction and TRAIs plans may allow the possibility of new firms participating in the auction of the bandwidth freed by the telecom operators, there may be a possibility of RIL leveraging the opportunity to get in the telecom market.
“Analysts say the biggest beneficiary of the move could be Mukesh Ambani’s Reliance Industries Ltd (RIL) enabling it to make a strong comeback into the telecom sector by becoming a full spectrum telecom operator offering both vanilla voice services as well as advanced 4G services. “ (ET)
– Research Team