)
The Street may have over reacted to the summons on Bharti Airtel chairman and managing director Sunil Bharti Mittal in a case related to allocation of additional spectrum. Bharti Airtel scrip slipped 5% to Rs 293 after the court issued the order.
“There is unlikely to be any impact on Bharti Airtel given that the company received allocation based on subscriber-linked criteria,” says a telecom analyst with a foreign brokerage.
The case relates to spectrum allocated to telecom firms since 2002 beyond the 6.2 Mhz based on subscriber-linked criteria. Though Department of Telecom’s (DoT) technical committee had recommended spectrum allocation beyond 6.2 Mhz only after operators reached a subscriber base of 9 lakh, the requirement was eased by the DoT to 4 lakh. The CBI has pegged the loss to the exchequer at Rs 846 crore.
Bharti Airtel in a press statement said that spectrum under government policy of February 2002, continued until April 2010 and all other telecom operators including MTNL and BSNL received additional spectrum under this policy.
The policy saw some changes after a rush for licences in December 2007 when DoT implemented a first come first served basis delinking spectrum from spectrum licence. The additional spectrum allocation policy was hiked by a factor of 2 to 6 times in various circles in 2008.
“Among the various regulatory concerns that plagues the stock, this case is the least serious,” says a telecom analyst.
Most analysts peg a Rs 40-50 per share impact on Bharti for regulatory risks including those of excess spectrum and spectrum renewal charges. While the company will pay excess spectrum charges based on 2001 auction prices, spectrum renewal fee would be based on the priced discovered in the forthcoming auction.
HSBC analysts peg the target price for the stock at Rs 380 a share with India business valued at Rs 396 a share while the Africa business is valued at Rs 24 a share. Regulatory risk is pegged at Rs 40 a share.
