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No details on new regime
India unveiled broad contours of the awaited New Telecom Policy 2011
(NTP-11) but no details. While in positive steps government targets 600m
broadband subscribers and plans to make available an additional 500MHz
of spectrum by 2020, roadmap for these and details on the more
important issues of spectrum pricing are now expected in the “Spectrum
Act”. Meanwhile in negatives for leading incumbents, NTP11 will abolish
domestic roaming charges and high regulatory uncertainty continues. We
maintain UPF on Bharti Airtel, Idea Cellular and Reliance Communications
Final New Telecom Policy in December 2011
q India’s Telecom Minister Kapil Sibal unveiled the much awaited “Draft” NTP 11 with
only broad contours and no details on all key issues of licensing and spectrum.
q NTP 11 vision is to reach 600m broadband subscribers (from current 12m) and
make available an additional 500MHz of spectrum by 2020.
q Till date 1382MHz in 2G GSM, 465MHz in 3G and 1320MHz in BWA/4G has been
allocated, yet leading operators are reeling under spectrum scarcity in 2G and 3G
with non judicious allocations and ever changing norms.
q NTP 11 will seek TRAI recommendations on licensing and create a separate
“Spectrum Act” wherein pricing/charges will be based on market pricing.
End of roaming rates a significant negative
q Meanwhile NTP 11 will abolish domestic roaming mobile charges by extending
Mobile Number Portability (MNP) beyond the home circle.
q Although timeframe for end of roaming rates remains uncertain these generate 5-
8% of mobile revenues and will slash Bharti and Idea FY13CL earnings by 10-20%*
q Roaming rate cuts will more than offset/wipe out the upside of selective rate hikes
and will likely be strongly opposed by the industry in the consultative process.
NTP11’s push for 4G/LTE/BWA and awaited “Spectrum Act”
q Alongside NTP 11 has boosted prospects for Reliance Industries upcoming 4G/BWA
rollouts by delinking spectrum from all future licences and even opening up US$5bn
USO (universal obligation) fund to set up pan India rural optical fibre network.
q While the most important issue for incumbents on spectrum – pricing, re-farming,
allocation, sharing/trading, cancellation will still await the “Spectrum Act” which will
make available spectrum at “price through market related processes”.
q We believe the Draft NTP 11 still leaves high regulatory uncertainty for leading
incumbent and in incremental negative calls for end of domestic roaming charges.
q With risks to our forecast earnings and high regulatory uncertainty on spectrum we
maintain our UPF rating on Bharti Airtel, Idea Cellular and Reliance Comm.
Draft Telecom policy 2011: Key highlights
q ‘Broadband on demand’ by 2015
q Emphasis on ‘rural teledensity’ to achieve 60% by 2017 and 100% by 2020
(current 35%)
q 80% of telecom networks to be domestically manufactured
q One country-one license policy – which implies that no roaming charges can
be charged by the operators
q Mobile number portability to be applied across the country
q Ensure adequate availability of spectrum and its allocation in a transparent
manner through market related processes.
q To enact a separate Spectrum Act which inter-alia deals with all issues
connected with wireless (spectrum) licences and their terms and conditions
q Make available additional 300 MHz spectrum for IMT services by the year
2017 and another 200 MHz by 2020
q All future spectrum allocations to be based on “market mechanism”
q Revenue maximization for the government is a secondary objective
q Create new category of service providers – network service operators and
service delivery operators
q To put in place a framework to regulate the carriage charges, which are
content neutral and based on the bandwidth utilisation
q Ask TRAI to frame recommendations for exit policy
q Delinking of spectrum from license
q Allow re-farming, pooling, sharing of spectrum
q Every 5 year create a spectrum roadmap
q Enact ‘Spectrum Act’ to deal with all spectrum issues
q To rationalize taxes and levies affecting the sector
q To encourage digitalization of the local cable networks
q Optical fibre network to be initially laid up to the village panchayat level by
funding from the Universal Service Obligation Fund (USOF)
q Access to this Optical Fibre Network will be open and technology neutral
q Telecom to be given the status of “infrastructure sector” – which will ensure
more access to bank funding
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
No details on new regime
India unveiled broad contours of the awaited New Telecom Policy 2011
(NTP-11) but no details. While in positive steps government targets 600m
broadband subscribers and plans to make available an additional 500MHz
of spectrum by 2020, roadmap for these and details on the more
important issues of spectrum pricing are now expected in the “Spectrum
Act”. Meanwhile in negatives for leading incumbents, NTP11 will abolish
domestic roaming charges and high regulatory uncertainty continues. We
maintain UPF on Bharti Airtel, Idea Cellular and Reliance Communications
Final New Telecom Policy in December 2011
q India’s Telecom Minister Kapil Sibal unveiled the much awaited “Draft” NTP 11 with
only broad contours and no details on all key issues of licensing and spectrum.
q NTP 11 vision is to reach 600m broadband subscribers (from current 12m) and
make available an additional 500MHz of spectrum by 2020.
q Till date 1382MHz in 2G GSM, 465MHz in 3G and 1320MHz in BWA/4G has been
allocated, yet leading operators are reeling under spectrum scarcity in 2G and 3G
with non judicious allocations and ever changing norms.
q NTP 11 will seek TRAI recommendations on licensing and create a separate
“Spectrum Act” wherein pricing/charges will be based on market pricing.
End of roaming rates a significant negative
q Meanwhile NTP 11 will abolish domestic roaming mobile charges by extending
Mobile Number Portability (MNP) beyond the home circle.
q Although timeframe for end of roaming rates remains uncertain these generate 5-
8% of mobile revenues and will slash Bharti and Idea FY13CL earnings by 10-20%*
q Roaming rate cuts will more than offset/wipe out the upside of selective rate hikes
and will likely be strongly opposed by the industry in the consultative process.
NTP11’s push for 4G/LTE/BWA and awaited “Spectrum Act”
q Alongside NTP 11 has boosted prospects for Reliance Industries upcoming 4G/BWA
rollouts by delinking spectrum from all future licences and even opening up US$5bn
USO (universal obligation) fund to set up pan India rural optical fibre network.
q While the most important issue for incumbents on spectrum – pricing, re-farming,
allocation, sharing/trading, cancellation will still await the “Spectrum Act” which will
make available spectrum at “price through market related processes”.
q We believe the Draft NTP 11 still leaves high regulatory uncertainty for leading
incumbent and in incremental negative calls for end of domestic roaming charges.
q With risks to our forecast earnings and high regulatory uncertainty on spectrum we
maintain our UPF rating on Bharti Airtel, Idea Cellular and Reliance Comm.
Draft Telecom policy 2011: Key highlights
q ‘Broadband on demand’ by 2015
q Emphasis on ‘rural teledensity’ to achieve 60% by 2017 and 100% by 2020
(current 35%)
q 80% of telecom networks to be domestically manufactured
q One country-one license policy – which implies that no roaming charges can
be charged by the operators
q Mobile number portability to be applied across the country
q Ensure adequate availability of spectrum and its allocation in a transparent
manner through market related processes.
q To enact a separate Spectrum Act which inter-alia deals with all issues
connected with wireless (spectrum) licences and their terms and conditions
q Make available additional 300 MHz spectrum for IMT services by the year
2017 and another 200 MHz by 2020
q All future spectrum allocations to be based on “market mechanism”
q Revenue maximization for the government is a secondary objective
q Create new category of service providers – network service operators and
service delivery operators
q To put in place a framework to regulate the carriage charges, which are
content neutral and based on the bandwidth utilisation
q Ask TRAI to frame recommendations for exit policy
q Delinking of spectrum from license
q Allow re-farming, pooling, sharing of spectrum
q Every 5 year create a spectrum roadmap
q Enact ‘Spectrum Act’ to deal with all spectrum issues
q To rationalize taxes and levies affecting the sector
q To encourage digitalization of the local cable networks
q Optical fibre network to be initially laid up to the village panchayat level by
funding from the Universal Service Obligation Fund (USOF)
q Access to this Optical Fibre Network will be open and technology neutral
q Telecom to be given the status of “infrastructure sector” – which will ensure
more access to bank funding
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