Alright, all you naysayers, bring out your humble pie; the mould is cast for a unified telecom licence. Last fortnight, the group of ministers (GoM) on telecom gave an "in-principle" approval to unified licensing, and on October 4, Telecom Regulatory Authority of India (TRAI) Chairman Pradeep Baijal and HDFC Chief Deepak Parekh actually made a presentation to the six-member GoM on how to move towards a unified regime. This is the second, and possibly the most fatal, blow to the cellular operators who in July lost a case at the Telecom Dispute Settlement Appellate Tribunal (TDSAT), which legalised (un)limited mobility with some riders. A key rider to restrict the mobility within an SDCA (there are more than 2,600 of them) had not been fulfilled when BT went to press. In both the instances, the winners are Reliance Infocomm and Tata Teleservices, the top two basic operators who are all set to muscle their way into mobile services.

But unified licensing is hardly as simple as Arun Shourie deciding that it should be done. In fact, Shourie admitted as much in a press briefing after the October 4 presentation: "Unified licensing will not happen as you press a switch. It will be implemented only after detailed deliberations," he said. Indeed, there are several seemingly complex issues to untangle. Most of them are technical like the scope of the licence, but the one commercial is by far the biggest stumbling block.

In 2001, when the fourth cellular licences were given out, the operators paid Rs 1,633 crore as licence fee for the spectrum, and the licence was to hold good for 20 years. Also, the number of operators was capped at four. But now the operators of so-called limited mobility will make a backdoor entry into cellular when unified licensing comes into force. Not surprisingly, that's a femur of contention with cellular operators who want to be compensated. But it's not clear just how, if at all, the government will manage that.

Some of the sops that the government is holding out to the cellular operators, like an increase in foreign direct investment in telecom from 49 per cent to 74 per cent and intra-circle mergers to a minimum of three operators, are seen as poor compensation.

Arun Shourie: Helping to usher in unified licensing

The first will benefit not just the cellular players, but all telecom companies. The second will be a non-issue once pan-India licenses are issued, and the current 20-odd circles in effect become one. If at all, the only beneficiaries will be the smaller players who don't have the financial muscle to stand up to national competitors like BSNL, Bharti, Hutch, Tata, and Reliance. Therefore, Bharti and Hutch, the two biggest cellular operators at whom the sops are primarily directed, are not impressed. The basic operators point out that a unified licence will give cellular companies the right to offer basic services. But as the cellular lobby keeps repeating it, it already has that option, courtesy the dot guidelines of 2001 on basic services. What also strengthens the hand of limited mobility operators is the fact that they already have a huge customer base, which can't be left in a lurch.

Those who question the logic of a unified licensing in the proposed form point out that it doesn't quite address potential technological developments in the future. For example, once new technologies like WiFi and WiMax-cheap wireless communication services that can be operated over unlicensed frequencies-come into play, CDMA (limited mobility platform) and GSM (the cellular technology) may themselves become redundant. What happens then? The only thing that's clear is that there are no easy answers to this telecom logjam.

-Sahad P.V.

MOOLAH
The Yin and Yang of Yuan

Consumers love china, but manufacturers elsewhere hate it. For more than seven years now, the Communist nation has ruled world trade with its cheap and getting-cheaper-every-year goods. At last count, it swamped global markets with some $325.57 billion of exports in 2002. The key to China's success, apart from its inexpensive but sophisticated manufacturing, is its currency, the yuan. Since 1995, it has been pegged at 8.28 to the US dollar, allowing Chinese exporters to eat rivals from other countries for lunch.

Now, however, nations across the world are waking up to the "yuan threat". They-like European finance ministers and US Treasury Secretary John Snow-are demanding that yuan's artificially low exchange rate be revised upward. But will China agree, since that will affect its exports? Opinions differ, but most concede that it may be possible to arm-twist China into a modest revaluation of, say, 10 per cent. That may also help Indian exporters, but only to an extent, since there are more competitive nations-especially in South- East Asia-than India. But when you are fighting in the global market, every little win counts.

-Ashish Gupta

Sacrificial Goat
Hiving its retail business will cripple IOC.

Pit stop: This is where IOC makes its money

How do you kill a lion without shooting it? Simple: Break a leg and the lion will eventually die of hunger. The government's proposal to bundle out and then privatise Indian Oil Corporation's (IOC) retail business is akin to that. It's a well-known fact in the oil industry that there's little money to be made in refining and that most of the profits come from retail. In fact, in the case of IOC, half of its profits came from the retail business. Worse, without its network of 22,000 petrol stations (plus 1,900 of IBP)-the largest in the country-IOC will be at the mercy of either the buyer of its retail division or somebody else like HPCL and BPCL. After all, it refines nearly 48 million tonnes of crude, or 41 per cent of India's total refining capacity, a year. Asks Rajiv Thakur, Head of Research at credit rating agency ICRA: "What happens to IOC's refining assets?"

But why is IOC's head on the chopping block? Because it was not set up under an Act of Parliament (a clause that has prevented privatisation of HPCL and BPCL), the government is free to sell it whichever way it wants to. But why unbundle? Because there's already excess refining capacity in the country-114 million TPA compared to annual demand of 98 million TPA. And the companies eyeing IOC-like Reliance, Royal Dutch-Shell, Exxon Mobil-have their own refineries. Never underestimate the power of corporate lobbies.

-Ashish Gupta

REPORT CARD
Q2 Scores A+

After a fantastic first quarter, corporate India is set to dazzle investors with an even better performance in the second quarter-ended September 30. For most companies, sales and earnings are set to rise. Courtesy?

"Better-than-expected monsoon and falling interest rates have helped create a feel-good factor in the economy," says Navin Agarwal, Director, Motilal Oswal Securities. Cheaper finance has buoyed everything from retail to housing to automotive (especially two-wheelers) to even banks, whose treasury income should remain high during this quarter as well. But not all sectors are smiling. "The appreciating rupee will put more pressure on it's already strained margins," says Nimish Shah, Director, Parag Parikh Financial Advisory Services. On the whole, though, corporate India couldn't be happier.

-Narendra Nathan

DASH BOARD

A
Rise, people. Not only have HSBC's Naina Lal Kidwai and Jumbo Group's Vidya Chhabria made it once again to Fortune's global list of 50 most powerful women in business, but have moved up. Kidwai from 50 to 47 and Chhabria to 38 from 44.

C
After years of denying that anything was seriously wrong at SPIC, Chairman A.C. Muthiah has finally admitted that the fertiliser company is BIFR sick. Ouch.