Wednesday, March 23, 2011

Axiata ... Mar11

The issue over India's Department of Telecommunications (DoT) cancelling the 2G licence for the Punjab circle will not have an impact on Axiata Group. This was because the licence was never operational.

India's Idea Cellular, in which Axiata Group has a 19.3% equity stake, has 60 days to explain to the DoT as to why the 2G licence for Punjab circle should not be cancelled.
Even Etisalat DB has been asked to defend its licences in Delhi and Mumbai service areas, while Idea will have to defend its licence in the Punjab service area. The reason for the cancellation is over the failure to meet network rollout requirements.

Idea's existing licence for the Punjab circle was not at risk; rather it is the inherited licence belonging to Spice Telecom. After the demerger of Spice and Idea, the overlap in licences did occur. This is in addition to the five other overlapping licences it has for Maharashtra, Delhi, Andra Pradesh, Kartanaka and Haryana. It inherited all the licences following the demerger but Idea is required to surrender them as part of the conditions imposed by DoT.

In November 2010 the Telecom Regulatory Authority of India (TRAI) had proposed the cancellation of 69 of the 127 licences issued since 2006 for failure to meet rollout obligations.

Implicit in TRAI's proposal was DoT's guidelines, which stipulated that a telco holding more than a 10% stake in another telco operating in the same circle must surrender their common licences.

Punjab's circle accounts for some 5% of Idea's subscribers base and 18%-20% of the company's revenue.

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