Aircel to scale down ops in 5 states, Bharti Airtel to gain

Reports indicate that Aircel is likely to scale down operations in five service areas. Currently it operates in 22 out of which these five are likely to go which are Madhya Pradesh, Gujarat, Haryana, Rajasthan and Punjab, reports CNBC-TV18's Reema Tendulkar.

All these five constitute close to about 10 percent of revenues for Aircel. However, Aircel per se is a small player and the total market share for Aircel stands about 5 percent. Now in the past three months Aircel is the second player which has spoken about scaling down operations. Prior to that it was Uninor, which had reduced operations.

What it highlights is how difficult the operating environment has been for most of the operators. So there is a case for consolidation and in that event, the largest player Bharti Airtel   could be the beneficiary of that.

UBS has maintained that Indian mobile sector can only support about 5-6 players in the long-term, which is positive for Bharti Airtel. Secondly it says that with respect to the impending auctions, irrespective of who bids, so there is a case that Bharti may not even bid. It believes there is case for tariffs to go out because all the operators are likely to behave rationally after giving that upfront payment for the auctions.

Meanwhile, Telecom Commission meet is scheduled tomorrow. It is just a recommendatory body but y will be considering on the very controversial spectrum refarming. It is going to be considering three options. A) is that operators retain entire 5 mega hertz. B) they retain upto 2.5 megahertz or C) they refarm the entire spectrum as is being recommended by TRAI. All these inputs which the telecom commission is likely to discus tomorrow will go into the Empowered group of minister (EGoM) meeting and that is also expected to take place safely this week and they will be taking the final call on this issue.