- December 5th, 2012
- Darren Kingman
The Indian Telecoms market has been in a state or turmoil for some time, with most of its problems stemming from the availability of the spectrum that the networks use to provide their services.
A few weeks ago, the Indian Government auctioned off the spectrum, which resulted in the Government raising approx $1.7 billion. This was actually around a fourth of what the Government had anticipated to recoup, leading the networks to make more savings that had been expected.
Since the auction, an air of optimism has eclipsed the telecoms market, leading to an increase in stock prices for Bharti Airtel, the country’s leading network. Currently, not all of the spectrum that is due to be sold has been sent to auction. Since the first shambolic attempt to raise capital, the Indian Government have a decision to make in regards to the remaining spectrum space, which includes Mumbai and New Delhi. The prospect of cheaper prices and a second auction has lead to belief that the networks will save money when it comes to renewing their rights to use the spectrum space.
This belief is now driving the prospect of greater profits for the entire sector, with Bharti Airtel not being the only network to see a stock price benefit since. Reliance Communications, another major player in the Indian Telecoms space, has also seen a 5% increase in the stock prices. This has lead to Credit Suisse publishing a paper called “The Turning Point”, which is headed up by their Mumbai based telecoms specialist, Sunil Tirumalal.
It will certainly be interesting to see what happens from here on with the sector, and if confidence continues to rise, we may see the previously powerful companies return to their former glories – which will only be to the benefit of Indian telecoms customers.