Mohammad Chowdhury (Originally from Bangladesh) writes on Indian TELECOM SECTOR: //Reserve price for spectrum remain high. My assessment based on industry valuation and assuming moderate sector profitability improvement over the next five years is that a block of 5MHz of 1800 MHz spectrum has a value (to an average industry player) of around Rs. 5,000 Crore. The recommendations issued by the Telecom Commission yesterday put forward a reserve price value which is almost double this, and about 15-20% higher than TRAI’s recommendations last month. But the silver lining is that the recommendations are still quite a bit lower than reserve prices we have seen in the recent past. The merger recommendations are generally positive. The 50% threshold for market share in a circle allows many combinations and permutations between operators, which is positive. If players need to pay one off spectrum acquisition charges this may moderate interest in some deals. This is likely to be important as spectrum access is likely to be key driver for acquisitions. To sum up, confidence in the sector won’t be restored properly until we see general confidence return to the economy and the rupee, given how import-intensive and debt-hungry this sector is.// Note: Mohammad has worked in 72 countries, lived in 7 and speaks 6 languages. He has a BA in Politics, Philosophy and Economics from Oxford University, an MPhil in Economics from Cambridge University, and executive training in strategy from Harvard Business School. He was born in London, has family origins in Bangladesh, and lives in Mumbai with his wife and five-year old son. Thanks!!
Posted on: Sat, 09 Nov 2013 14:59:33 +0000
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