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Unified regime offers level playing field — Crisil

MUMBAI NOV. 4. Rating agency Credit Rating and Information Services of India (Crisil) today said the unified telecom licence regulation provides `a level playing field' to both GSM and WLL-CDMA operators even as it cautioned that cellular companies' margins would come under pressure due to intense competition.

"The unified licence regime seems to have offered a solution to the controversy on limited mobility," Crisil Director (infrastructure rating), Anil Kumar, said in a release here.

The wireless telephony business was mired in regulatory uncertainty for the last three years. Now, with the advent of new regime, policymakers have significantly cleared the regulatory haze, the release said.

The competitive scenario would intensify further as the number of fully mobile service operators would rise to six from the existing four in most circles. The smaller players would be more sensitive to competitive pressures as their subscriber growth would be further stunted, Crisil said. On the other hand, major players would find it easier to fund their business plans as lenders are expected to take a positive view on the regulatory clarity, it added.

The benefits of offering connections to a larger subscriber base through full mobility services, that too without major incremental investments, out- weigh all the costs the WLL players would have to incur while migrating to the new regime, it said.

The competition could lead to lower roaming charges, resulting in lower revenues for GSM operators, which would put pressure on their margins, it said.

The rating agency said the roaming charges account for around 10 per cent of GSM operators gross revenues, even though this might not have a significant impact on their toplines. However, higher selling and marketing costs for acquiring and retaining subscribers in an increasingly competitive scenario might have an impact on the company's topline.

The GSM operators are expected to continue their struggle to extract compensation from the government for permitting WLL-CDMA operators on the GSM turf, it said adding, they would also have to brace up operations to take on the WLL-CDMA players.

The issue that remains is whether GSM operators will take recourse to litigation in their attempts to protest against full mobility to WLL-CDMA operators. — PTI

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