Global economy is passing through an unprecedented slowdown. There is uncertainty everywhere. The USA government came to the rescue of giant banks like Citigroup and Merrill Lynch by giving emergency funds from the federal government. On Friday, both announced new multibillion-dollar write downs of their portfolio of mortgage investments, taking their combined credit losses to $100bn. Moreover, Citigroup revealed that the pain was now spreading more widely through its consumer business. This is a clear indication that the worst is yet to come.
Many European nations and Japan have already announced war chest to bail out their leading banks. People in these countries have lost faith in the financial system. No wonder, analysts are banking on high growth of the Chinese economy to bail out global economies.
Indian economy is also reeling under the impact of great the slowdown in global economies lead by the USA, Europe and Japan. Companies have stopped all expansion plans. Only existing plans are continuing. IMF has already reduced estimated growth rate to 7% from an earlier estimate of 9% for the next year.
Telecom sector is the poster boy of the economic liberalization of India. All major players – Government, Manufacturers/software developers, Value Added Service (VAS) providers and operators – have mega plans. For instance, Bharti Airtel is investing close to $2 billion on its expansion plans during this financial year. Five new telecom operators are slated to set up network and launch services during this financial year.
We have tried to gauze the impact of slowdown on telecom sector – policy and corporate:
3G Auctions to be delayed:
The government will certainly review its decision to auction 3G services in such a scenario. Bidding will not be as competitive as one would have expected if the bidding had taken place about six months ago. Finance ministry has set a deadline of December 31, 2008, for auction of spectrum. What is certain is that auctions will not take place during this year.
Earlier, the Finance ministry had said that it expected to collect about Rs 40,000 crore through 3G spectrum auction. Reserve price of spectrum is Rs 2,200 crore.