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DoT view on TRAI recos reduces reg. overhang? NTP a non-event
Draft NTP a “feel good policy” with no clarity on framework
The guidelines given in the draft New Telcos Policy (NTP) did not divulge
details on various issues like an exit policy for new entrants and national
free roaming. As we expected, there was no mention of spectrum
pricing/refarming. The telcos minister mentioned that the final policy will
be released before end-Dec 2011. In our view, the key negative was
nationwide free roaming (which puts c.5-6% of Bharti/Idea’s cellular
revenues at risk). However, we believe this issue is well flagged and not
new.
NTP a non-event from stock implication perspective: key points
1) The NTP’s objective is to increase rural teledensity from 25% now to
60%/100% by 2017/2020; 2) The DoT is keen to ensure affordable
broadband and is looking for 175 mn broadband subs by 2017; 3) DoT
intends to make available additional 300MHz spectrum for telco services by
2017 and another 200MHz by 2020; 4) DoT will permit spectrum pooling,
sharing and trading; 5) NTP will focus on convergence and encourage VOIP
(likely to help Reliance Industries [Neutral; Rs960] in its TD-LTE launch).
DoT comments on TRAI recos: reduces regulatory overhang?
The DoT commented on TRAI’s May-10/Feb-11 recos. Key suggestions: 1)
TRAI may reconsider the recommended current price 2G prices; 2) TRAI
may indicate the rationale for defining the prescribed limit of spectrum (i.e.
excess spectrum); 3) 900 MHz refarming may be examined subject to 1800
MHz spectrum availability. The DOT believes six months may not be
sufficient for subs migration from 900 MHz to 1800 MHz.
Excess spectrum/license renewal charge may have downside risks
With the DoT asking TRAI to revisit some topics like refarming/spectrum
pricing, we see reducing regulatory overhang on telcos, as we consider
current recos on refarming/spectrum pricing to be pretty stringent. While
we expect Bharti/Idea to pay license renewal charges/excess spectrum
charges, we now think the amount may be lower than TRAI’s old
recommendations. Given the DoT has asked for clarification on TRAI on its
consultations for many issues, we think it may be 4-5 months before TRAI
responds, so we remain unclear whether the spectrum pricing/re-farming
issues will be addressed in NTP-11. Reiterate Buy on Bharti/Idea.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
DoT view on TRAI recos reduces reg. overhang? NTP a non-event
Draft NTP a “feel good policy” with no clarity on framework
The guidelines given in the draft New Telcos Policy (NTP) did not divulge
details on various issues like an exit policy for new entrants and national
free roaming. As we expected, there was no mention of spectrum
pricing/refarming. The telcos minister mentioned that the final policy will
be released before end-Dec 2011. In our view, the key negative was
nationwide free roaming (which puts c.5-6% of Bharti/Idea’s cellular
revenues at risk). However, we believe this issue is well flagged and not
new.
NTP a non-event from stock implication perspective: key points
1) The NTP’s objective is to increase rural teledensity from 25% now to
60%/100% by 2017/2020; 2) The DoT is keen to ensure affordable
broadband and is looking for 175 mn broadband subs by 2017; 3) DoT
intends to make available additional 300MHz spectrum for telco services by
2017 and another 200MHz by 2020; 4) DoT will permit spectrum pooling,
sharing and trading; 5) NTP will focus on convergence and encourage VOIP
(likely to help Reliance Industries [Neutral; Rs960] in its TD-LTE launch).
DoT comments on TRAI recos: reduces regulatory overhang?
The DoT commented on TRAI’s May-10/Feb-11 recos. Key suggestions: 1)
TRAI may reconsider the recommended current price 2G prices; 2) TRAI
may indicate the rationale for defining the prescribed limit of spectrum (i.e.
excess spectrum); 3) 900 MHz refarming may be examined subject to 1800
MHz spectrum availability. The DOT believes six months may not be
sufficient for subs migration from 900 MHz to 1800 MHz.
Excess spectrum/license renewal charge may have downside risks
With the DoT asking TRAI to revisit some topics like refarming/spectrum
pricing, we see reducing regulatory overhang on telcos, as we consider
current recos on refarming/spectrum pricing to be pretty stringent. While
we expect Bharti/Idea to pay license renewal charges/excess spectrum
charges, we now think the amount may be lower than TRAI’s old
recommendations. Given the DoT has asked for clarification on TRAI on its
consultations for many issues, we think it may be 4-5 months before TRAI
responds, so we remain unclear whether the spectrum pricing/re-farming
issues will be addressed in NTP-11. Reiterate Buy on Bharti/Idea.
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