Wednesday, May 12, 2010

Telecom companies - TRAI recommendation- potentially negative for sector

The proposals by Telecom Regulatory Authority of India (TRAI) have been greeted with anger by mobile phone companies, which said the cure that the wants to administer is worse than the disease, says The Economic Times. Many cellphone operators warned that any move to implement these recommendations could result in legal challenges as some of them want a panel to rework all key policies. Reliance Communications was the sole operator to welcome the planned changes. The paper quotes an unnamed source as saying TRAI has unleashed more confusion that would impact prospects of all companies. TRAI says the plan to charge a one-time fee for holding 2G radio spectrum in excess of 6.2 MHz would mean mobile phone companies must pay INR300-350bn more. The fee will be linked to the price of 3G spectrum that is now being auctioned. The worst affected companies will be Bharti Airtel, BSNL, Idea Cellular and Vodafone Essar.

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