The 3G roaming controversy is currently in court, with operators having brought in a stay order on the government’s notices for penalties. The government’s contention is that the 3G network sharing arrangements are illegal and need to be stopped, while operators argue that this was explicitly allowed by the government prior to the auctions in 2010.
Without taking a view on the outcome of the legal process, we note that the impact on Airtel, even in the worst case, is quite limited. 3G revenues today account for less than 1.5% of India mobile revenues, but are expected to be a significant growth driver in the future. In this context, we note that in the 13 circles where Airtel has its own 3G spectrum/network (~70% of its national revenues), its competitive position in these circles should be protected. The circles in which Bharti uses the 3G network of other operators (which are at risk) account for less than 25% of its national revenues.
The 13 circles where Airtel has 3G spectrum account for ~70% of its national revenues as shown below.
