Supreme Court sets Jan 11 deadline for 2G auction, but with stern warning Times of India, August 28, 2012 The Centre had pleaded for extension of deadline to November 12 with an additional 40 days to complete the process for auction of 122 spectrum licences in 22 telecom circles, which were cancelled by the court in its February 2 judgment, while directing their auction by June 2. Senior advocate P P Rao sought to stretch the time limit by narrating the lengthy process involved in auction and requested the bench of Justices G S Singhvi and K S Radhakrishnan to grant such extension that the government would not need to come back with a request for further relaxation. Having extended the deadline twice — first from June 2 to August 31 and now from August 31 to January 11 — the bench did not give all the relief at one go. Wanting to wait and test the Centre's willingness to abide by its commitment, it posted the matter for further hearing on January 13 without specifying the time it was willing to grant for allocation of spectrum to successful bidders at the auction. The bench told the government, "We want to know on January 13 whether you have completed the auction process or not and then we will consider the plea for grant of additional time for allocation of spectrum to the successful bidders in the fresh auction." The bench warned the government that "if the Centre failed to complete the auction process by January 11, 2013, the court will be constrained to initiate suo motu proceedings against concerned officials under the

Contempt of Court Act". It also allowed existing service providers to continue operations till January 13. While warning the Union government that it might get saddled with "exemplary cost" if it violated the fresh deadline, the bench barred all other courts in India from entertaining any petition, application or suit relating to auction of 2G spectrum being conducted on the directions of the Supreme Court. Justices Singhvi and Radhakrishnan agreed to entertain the plea for extension of auction deadline only after telecom secretary R Chandrasekhar filed an affidavit through advocate Apeksha Sharan undertaking that "the central government is firmly and irrevocably committed to implement the aforesaid judgment". Refuting allegation that the presidential reference was a ploy to step around the 2G judgment directions for auction, Chandrasekhar said, "The presidential reference has nothing to do in so far as implementation of the aforesaid judgment of the Supreme Court, which has become final and binding. The efforts of the government are aimed at attracting maximum number of bidders in order to realize the maximum price for 2G spectrum as contemplated and intended by the Supreme Court's judgment." To the discomfort of the government, Janata Party president Subramanian Swamy said the seven-month delay in implementation of the 2G judgment due to Centre's repeated attempts to extend the deadline benefited private operators, who as per the original judgment were to surrender their licences by June end. The bench said it would consider at an appropriate time Swamy's application and contention of advocate Prashant Bhushan that the government's attempt was to overrule the 2G judgment by first withdrawing the review

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petition and then sending a presidential reference seeking clarifications. Swamy said, "If further extension of time is granted by the court, provision must be made to realize the amount equal to the interest the government could have earned on the difference between the discovered market price by auction at the date of actual auction, and the spectrum licence price determined pursuant to the two press releases issued on January 10, 2008 (when A Raja headed department of telecom had issued the LOIs on first come-first served basis and the payments made by the licensees) of Rs 1,650 crore." TCS insight: Analysts predict the auctioning of 2G spectrum will bring back the stimulus in the industry which has not seen positive policy changes for a while. While the telecom incumbents are gearing up for another round of competition , this auction will be good news for customers and suppliers alike as it will not only bring in competition and options to consumers, but suppliers of technology and services will also see renewed interest for their offerings. Canadian companies operating in this space should monitor this development closely to identify new players in the market in order to effectively position their products. _________________________________________ Making calls should be free: Kapil Sibal Telecom Tiger: September 29, 2012 Telecom Minister Kapil Sibal on Friday urged the telephone operators to change their mindset and focus more on data services to generate revenues than voice. Addressing the CII broadband summit, Sibal said that talking to each other should not be taxed. “There should be no charge on voice. Customers should gradually be charged only for data services and not for making calls. He said that broadband has a huge potential to empower the people of the country and has become essential to the lives of the people. Sibal said that empowering the illiterate by providing access information to them is huge task for the government. “The government is investing around Rs 35,000 crore on various broadband related projects which will create a secondary market of around Rs 3 lakh crore”, Sibal said. He said that by December 2013 Rs 20,000 crore national broadband plan would be completed. In response to a query Sibal said that Department of Telecom will soon approach Cabinet to seek approval for manufacturing five million 'Akash-2' tablets in the country. TCS insight: In what could be seen as the new growth cycle, data services are expected to drive top line revenues for telecom companies and this gives Canadian companies providing data products, technology and services a new opportunity to follow. _____________________________________________

Mobile tariff hikes indicate improving industry dynamics Times of India, September 25, 2012 The Indian telecom industry is going through a phase of consolidation, due to the cancellation of 2G licenses by the Supreme Court earlier this year and a fresh spectrum auction scheduled in November 2012. The number of operators is likely to reduce after the auctions, which will reduce the competition in the sector. This is the second round of tariff hike following the one in mid-2011. Average revenue per minute (ARPM) will gradually start rising after a sharp decline over the last few years due to fierce competition in the sector. Although higher revenue from the tariff increase will result in an improvement in profitability of telcos, some of it will cover increasing operating costs including the recently increased diesel prices. However, the complete impact of these hikes will be visible only after a few quarters, as it will be gradually implemented across circles and subscribers. Moreover, India Ratings expects the incremental revenue from the tariff hike to easily offset its negative impact on the minutes of usage, if any. At present, call rates in India are among the lowest in the world. As per the data released by the Telecom Regulatory Authority of India, the mobile subscriber base was 913 million at end-July 2012, down by 21 million from the base at end-June 2012 due to deactivation of inactive subscribers. With an already high subscriber base, there is limited opportunity for telcos to grow by adding new subscribers. As a result, India Ratings expects telcos to now focus on other growth levers like tariff hikes, an increase in data services usage, value-added services, among others. India Ratings has a negative outlook on the Indian telecom industry. Most the Indian telcos have stretched balance sheets as they had raised debt for acquiring 3G/broadband wireless access spectrum in 2010 and/or roll-out of network. Owing to a lower-than-expected take-off of 3G services and subdued operating performance, the credit profile of most of the telcos has weakened over the last few years. TCS insight: After years of consistent tariff reductions, telecom companies have finally started revising tariffs upwards. This has been a direct result of 2G cancellations and analysts believe this will be a short lived phenomenon since new telecom operators are expected to enter the market after the new 2G auction planned in January 2013. In the meanwhile, this provides an opportunity for telecom companies to tidy up their balance sheet with increased revenues. _________________________________________

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Tech Mahindra sets up three 4G labs The Hindu Business Line, September 13, 2012 Mumbai: Tech Mahindra has set up three laboratories for Long Term Evolution technology, one in Delhi and one each in Pune and Bangalore. The software services provider, in which vehicle manufacturer Mahindra & Mahindra holds about 48 per cent stake, intends to work along with companies readying to launch the services in the country. Long Term Evolution (LTE), commonly called 4G, is a standard for high-speed data communication for mobile phones and data networks. In India, 4G (which is 4-10 times faster than 3G) licences were issued to six operators, with four of them actively looking to deploy the services. “We will support the operators to deploy the services. We have been working with telecom operators in many countries, including the major ones, and we intend to provide this expertise here in India,” Tech Mahindra Head of Mobility Business Jagdish Mitra said. However, Mitra declined to names the companies, citing confidential clauses. He also did not disclose the investments Tech Mahindra has committed for the technology, nor the expected returns. Tech Mahindra has set up a device lab in Delhi. It has also set up an application and network integration lab each in Pune and Bangalore. Tech Mahindra would provide system and network integration services, security services and configuring of new and emerging devices for 4G services. Bharti Airtel, the country’s largest telecom operator, has already launched 4G services in two circles, Kolkata and Bangalore. Other three major players — Reliance Industries, Tikona Digital Networks and Aircel — are expected to launch the services by this year-end, or in early 2013 TCS insight: Telecom companies are betting on data driven revenue models and investing significantly to provide consumers high speed data access. Technologies such 3G, LTE, WiMax, and EVDO, which were unheard of almost a year back are prominently been promoted by telecom companies in a bid to outplay competition. Canadian companies operating in this space

may see significant interest from Indian telecom companies which are looking at increasing efficiency within their bandwidth constraints. ___________________________________________ Foreign players allowed to bid solo for 2G auctions Business Standard, October 01, 2012 New Delhi: The government on Friday allowed foreign entities to participate in the upcoming 2G auctions without an Indian partner. However, the players should form a joint venture with the Indian partner. According to the new guidelines issued on Friday by department of telecommunications (DoT), foreign entities can participate in the auctions directly and obtain a licence. This will make the upcoming auctions more attractive to certain foreign players such as Telenor, which wanted to bid directly without an Indian partner in the auctions. The notice inviting applications (NIA) issued on Friday said that companies interested in starting telecom business in India will have to pay Rs 1 crore for unified licence in a service area where they wish to operate. There will be a lock-in period of three years. The NIA lists out the rules and regulations governing the auction and is considered the only legally binding document regarding the auction. Potential bidders have until October 19 to submit applications. DoT will publish ownership details of bidders on October 21. By November 6, DoT will have the final list of bidders and a mock auction is expected to start on 7 November. The actual auction is expected to start on 12 November. TCS insight: Foreign players such as Etisalat, Telenor, and Siestema have been asking the government to relax bidding norms in order to allow them to apply individually for 2G licenses. During the last spectrum auction, these companies had bid with Indian partners and eventually ended up getting their licenses cancelled after the 2G scam. With the government allowing solo bidding for the new auction expected to start in November 2012, many global telecom players are looking to enter the profitable Indian telecom industry. _____________________________________________

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