The DoT has leaked to the media that some of the new entrants have approached the DoT to surrender license and spectrum in some or all of the circles. Etisalat DB, Loop, S Tel are the likely players. This means their will be an end to the 2G wireless spectrum crunch faced by the incumbent players and hence better use of 3G spectrum for Broadband and Data.
As per current license conditions, there is no refund of license fees on return of license and spectrum. However DoT is studying the same to enable exit of some of the non-starter telcos. DoT is also studying M&A guidelines to enable merger of smaller telcos with large telcos. This may involve removing the cap on spectrum possessed by the merged entity and change in lock-in equity norms.
Any change in M&A guidelines and / or license conditions may enable M&A in the telecom sector. This may remove the pressure on tariffs and operating margins. This is positive for incumbent players like Bharti Airtel, Vodafone etc.
DoT & the Telecom Ministry have a chance to come out of the 2G Spectrum Scam and must strictly invoke the rollout obligation clauses and fine the Operators who have failed to fulfill the license conditions and hence seize the spectrum instead of accepting them by way of surrendering.
Stay tuned for an update on how RIL’s Mukesh Ambani is likely to take the best use of this situation in the Telecom Industry.