Order paves way for policy clarity, no major impact on investor sentiment: Experts
NEW DELHI: The Supreme Court judgement on Thursday, cancelling 122 2G licences granted during the tenure of former telecom minister Andimuthu Raja, paves the way for clear policies in the fast-growing sector and is likely to reassure investors, experts said. They say the huge Indian market and robust economic growth would attract investors.
"I don't see any negative impact. Most investors would now be happy and reassured by the Supreme Court judgement. I think in one sweeping judgment the court has settled the policy issues, which will pave the way for a stable policy regime," said telecom expert Mahesh Uppal. Government officials too said the move will in no way hit investments as investors realize that in a democracy the court is the apex authority. "It actually brings clarity and establishes the rule of law," said a top official.
Experts said the recent SC judgement that ruled in favour of Vodafone in the $11-billion tax case had helped boost investor sentiment.
The 2G spectrum scam and the arrest of top corporate executives, a minister and senior officials had cast a shadow on the sector that has posted scorching growth and has attracted global attention. Analysts say the judgement will now ensure that the policy for the sector provides a level-playing field for all investors.
But Norway's Telenor, which operates under the Uninor brand with its joint venture partner Unitech, said it was shocked to see that Uninor has been penalized for faults the court has found in the government process. "We have been unfairly treated as we simply followed the government process we were asked to," the company said in a statement.
Industry group said the judgment underlines the need for a pro-reform, competitive and market-based process for allocation of scarce national resources such as spectrum. The uncertainty currently prevailing in the sector will be eliminated, the Ficci said.
"In the new environment, India is expected to invite and attract large scale domestic and foreign investment afresh. This may take some time but is an improvement over an environment that mirrors uncertainty. Ficci expects the government to act with a great sense of urgency, while addressing the concerns of the investors and more so of the subscribers bringing a new equilibrium with new licences at the earliest and resolving the outstanding issues to the satisfaction of all the stakeholders," Ficci said in a statement.
"Consumer interest should be kept uppermost and Ficci hopes that it will be well ensured by the government," it added. Some experts said there may be some concern in the short term, but it is unlikely to have any major impact going forward.
"In the short term there maybe some concern but India is a large country where foreign players can invest in several sectors. In telecom, I would be curious to know, who are the new players who would want to come in now," said Jaideep Ghose, partner, KPMG.
The Indian economy is expected to expand by 7% in the current fiscal that analysts say is impressive against the gloomy global economic backdrop. The growing Indian middle class and robust demand is expected to attract attention of investors. Analysts said the judgement marked an end to the uncertainty that had plagued the telecom sector after the 2G scam was unearthed.
"We don't see any adverse impact on the investment climate. This judgement was not a surprise to the markets. It provides some clarity for future policy making," said N R Bhanumurthy, professor at the National Institute of Public Finance and Policy.
Order paves way for policy clarity, no major impact on investor sentiment: Experts - The Times of India