Airtel Vodafone Knock Delhi High Court to Retain 900MHz Spectrum

Airtel and Vodafone have filed a case in the Delhi High Court, challenging the government’s plan to auction 900Mhz spectrum. They have taken this legal recourse stating that they have the right to extend the current contract by another 10 years.

Notably, 900Mhz and 1800 Mhz spectrum is coming up for renewal by end-2014 for Mumbai, Delhi and Kolkata. The government is planning an auction of these spectrums in March 2013. Any potential stay from the high court could delay the auction of the 900 Mhz spectrum

Operators are taking this legal recourse stating that they are eligible for an extension of the contract by another 10 years by paying a price determined amicably by both parties (the government and operators).

We believe that the Indian telecom industry is going for virtual consolidation (number of meaningful players down to 6 from early teens) given the weak profitability and upcoming regulatory cost burden. We expect incumbents – notably, Bharti and Idea – to benefit from emerging trends (consolidation, growth in data, potential tariff hikes etc) in the medium to long term.