The Supreme Court's order cancelling 122 licences given out in 2008 settles the spectrum row for once and all, although it brings bad news to the affected operators, analysts said on Thursday.
In a blow to the government, India's top court quashed all 122 licences for mobile phone services issued in 2008 and left it to a trial court to decide on a possible probe into the role of Home Minister P. Chidambaram, then finance minister.
In what also comes as a respite to some 45 million phone subscribers covered by the 122 licences, Justices G.S. Singhvi and A.K. Ganguly ordered that the services will carry on for four months, by which time the telecom watchdog will decide the future action plan.
"It is a very positive verdict and has settled the spectrum row for once and all. Some operators would definitely be affected but they will have to accept the verdict," Mahesh Uppal, telecom analyst and director of consultancy firm Com First India said.
"From a long term perspective it is going to help telecom industry as a whole. It will open up the opportunities for some global telecom companies who missed the race earlier to invest in Indian telecom industry," said Benoy C.S., director, ICT Practice, Frost & Sullivan, South Asia & Middle East.
Boost to big players
Market leaders such as Bharti Airtel and British-based Vodafone, which last month scored a big win when the Supreme Court ruled it was not liable for $2.2 billion in tax, are poised to benefit from the ruling.
The licences affected include those held by Unitech Wireless, a joint venture of Norway's state-backed Telenor and Indian real estate firm Unitech, which has been the most aggressive of the newer operators and had more than 36 million subscribers in the country as of December.
"We have been unfairly treated as we simply followed the government process we were asked to," the Telenor joint venture, which operates as Uninor, said in a statement.
"We are shocked to see that Uninor is being penalised for faults the court has found in the government process," it said.
Telenor shares fell 3.67 per cent in Oslo.
Freed-up spectrum will be auctioned, which could bring a multi-billion dollar windfall to a deficit-strapped government.
Rising consolidation
Investors and operators have long called for consolidation in the crowded industry, and Thursday's ruling stands to benefit the country's biggest operators.
"This verdict is good news for established incumbent operators and in the short term, we are likely to see some increase in tariffs," said Benoy C.S., a director at consulting firm Frost & Sullivan.
Shares in Bharti, the world's fifth-largest carrier by subscribers, ended 6.8 per cent higher while Idea gained 3 per cent, reversing earlier losses. Unitech fell 7 per cent.
Raja 'gifted away national asset'
"The exercise by the officers between September 2007 and March 2008 under the leadership of then telecom minister A. Raja was wholly arbitrary, capricious and contrary to public interest apart from being violative of the doctrine of equality," the verdict said today.
"He (Raja) virtually gifted away the important national asset at throw away prices."
The verdict pushed Communications Minister Kapil Sibal into an overdrive. He met Prime Minister Manmohan Singh and Finance Minister Pranab Mukherjee before a press conference in which he defended the government, saying implementation of policy alone was wrong.
"The court has indicted the 'first come first serve' policy. This was the policy of NDA (National Democratic Alliance) government," he said. Blaming Raja, he added: "The order says the advise of finance ministry and Prime Minister's Office wasn't followed by then minister."
His own ministry was then overseen by Raja, an undertrial who began his second year in jail on Thursday.
India's telecom network has grown into the the second largest in the world after China, with 926.53 million subscribers, serviced by 15 operators, including two state-run companies, Mahanagar Telephone Nigam and Bharat Sanchar Nigam.
With elections underway in five states, the opposition immediately seized the opportunity to renew its demand for the ouster of the home minister, and said the United Progressive Alliance (UPA) government under Prime Minister Manmohan Singh had no moral right to continue.
"The Bharatiya Janata Party would like to ask Prime Minister Manmohan Singh: Would you take some action against Chidambaram or will you continue to express your confidence in him despite so much evidence?" wondered spokesperson Ravi Shankar Prasad.
The main petitioner was clearly elated.
"The court has said the government must now get market value of these licences," Swamy told reporters here.
"As far Chidambaram is concerned, the court said the trial court can decide."