Loss of investor confidence imminent due to policy confusion raised by SC judgment

“Loss of investor confidence imminent due to policy confusion raised by SC judgment”
“Clarity in formulation of new guidelines, statesmanship in vision, character in execution essential to regain trust”
February 2, 2012: The Hon’ble Supreme Court judgment (on 2G spectrum licences granted in 2008 seems to suggest that government policymakers are required to revise their policy framework with retrospective effect. This could shake investor confidence in India and drive away precious capital and management expertise.

It may take more than the National Telecom Policy 2012 to reassure investors. It may also call into question, the capacity of India as a nation to develop and implement transparent, forward looking policy and governance frameworks. This could mean that investors may shy away from other priority sectors such as roads and highways, energy and power utilities.

Secondly, telecom operators who conformed to the policy guidelines of the day for allocation of 2G spectrum licences in 2008 are expected to ask for a fair deal. These players, who followed the laid down rules and won 2G spectrum licences as per the prescribed norms, can question the government’s right to levy additional fee by way of the Supreme Court prescribed auction route.

More importantly, the Indian telecom services market currently is not exactly in the pink of health. The industry may be in no mood to pump in more funds into an already volatile telecom marketplace.

It is very important for the concerned stakeholders – DoT, TRAI and the Telecom Service Providers to sit together and construct a feasible and robust new policy, which not only passes legal scrutiny, but also helps to safeguard the long term interests of consumers, public institutions (government) and the industry (operators).