TRAI recos more positive for CDMA operators: Macquarie Sec

There were very tempered reactions to the TRAI recomendations yesterday. Shubham Majumder, Telecom Analyst at Macquarie Securities discusses the implications of the recomendations on companies like Bharti, Reliance, Tata Tele and the likes. 

He says that recommendations have no major negative surprises. However, there are quite a few scenarios that can unfold over the next six months, but that will largely depend on operator’s actions.

Excerpts from CNBC-TV18’s exclusive interview with Shubham Majumder:

Q: Break it down as you see it in terms of an impact on these three listed players Bharti, Reliance Comm and Tata Tele?

A: The 3G recommendations by TRAI have come in yesterday. The recommendations largely have no major negative surprises. There are quite a few scenarios that can unfold over the next six months. But that will largely depend on operator’s actions.

The good thing about the recommendations is that it actually lays out three spectrum bands- 2100 megahertz, 800 megahertz and 450 megahertz- at which operators can pitch their services.

Existing GSM operators can go for 2100 megahertz band, while CDMA operators have the option of either pitching in their networks at 450 megahertz, 800 megahertz or 2100 megahertz bands.

There will be an auction that will determine who gets a spectrum. There will be five operators that will be given a spectrum on 2100 megahertz band and there will be a reserve price.

If an operator actually wants to get into a PAN India 3G spectrum on a nationwide basis, the minimum reserve price he has to bid is about Rs 1010 crore.

Also, there will be a 1% revenue share license fee that they will have to pay from the second year after the license period commences. All in all, I think the recommendations are quite positive. 

The recommendations also go on to discuss the fact that a lot of 2G and 2.5G spectrum will be freed up at the 900, 1800 and 800 megahertz bands after the defence forces vacate the spectrum over the next six months. This comes as a major positive for the sector.

Q: If you have to rank it in terms of which one really stands to gain the most, which of these telecomm companies would it be?

A: As such there are no winners or losers out of this recommendations. It's a simple recommendation depending on where operators place their bids and who are the final winners.

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