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The ratings agency has said that credit risk profiles of these telecom operators are expected to remain unaffected because the business risk profiles of these players will improve if they obtain 3G spectrum blocks for their key circles
Ratings agency CRISIL has said that it does not expect revenues of telecom operators to grow substantially over the next two years following the start of the auction of 3G spectrum and the value-added data and video services they would offer in the future.
The Indian government is selling three slots of spectrum across the nation with the exception of a few States where four slots will be on offer. The reserve price for pan-India spectrum has been fixed at Rs3,500 crore. According to the notice inviting applications (NIA) for 3G spectrum auction, of the 22 circles only five States—Punjab, Bihar, West Bengal, Himachal Pradesh and Jammu & Kashmir—will have four private players. 3G mobile services will allow high-speed content download and broadband services. The successful bidders would be allowed to offer 3G services on a commercial basis from 1 September 2010.
CRISIL said that over the near term, availability of the 3G spectrum will ease the constraints on the 2G spectrum connected to the voice services of telecom service providers. This will help telecom operators that succeed in the auction to improve the quality of their services, while maintaining strong subscriber volume growth in their existing voice services. This will, therefore, affect their business risk profiles positively, by enhancing the retention of high-value customers and improving the players’ competitiveness in an industry where competition has intensified and where churn rates are expected to increase with the implementation of mobile number portability, the ratings agency said.
CRISIL said that telecom majors rated by it are expected to bid aggressively for spectrum blocks for the circles in which they hold leading positions. However, these players are unlikely to display such aggressiveness for all the circles for which the bidding is taking place, bringing a degree of moderation to the final bidding amount, it added.
Credit risk profiles of these telecom operators are expected to remain unaffected because the business risk profiles of these players will improve if they obtain 3G spectrum blocks for their key circles. Also, the incremental expenditure incurred by the players towards procuring 3G spectrum blocks is likely to be manageable, given the large capital expenditure programmes already being executed by these telecom operators to expand their geographical presence, CRISIL said.
However, the ratings agency said that large debt funding of the additional investment on 3G spectrum licenses may exert pressure on the financial risk profiles of CRISIL-rated players over the near to medium term. The pressure on the players’ financial risk profiles will be offset by their strong cash flows, underpinned by a mature pan-Indian presence for most rated players or support from their parents, it added.
The Delhi High Court has criticised LIC for denying claims in case of death of the insured within two years of the commencement of its Jeevan Kishore policy
“Given the number of claims being made on yearly basis on account of the death of children under the Jeevan Kishore policy, this court holds (that) LIC is not acting fairly or reasonably in insisting that no claim will be entertained for two years after the commencement of the policy,” Justice S Muralidhar of the Delhi High Court has said in a recent judgment, reports PTI.
The Court’s remarks came while allowing a petition filed by a lawyer whose daughter died in 1996 within two years of the commencement of LIC’s Jeevan Kishore policy.
Rejecting LIC’s argument that one cannot claim the benefit if the assured died prior to the deferred date, Justice Muralidhar said, “It is directed that the claims made hereafter under the Jeevan Kishore policy will not be repudiated by LIC on the ground that they have been made before the deferred date subject, of course, to other conditions being satisfied.”
The Court, however, made it clear that the decision is prospective and will not result in reviving claims that have already been rejected under the said ‘deferred date’ clause.
Rajiv Khosla, a Delhi-based lawyer had approached the Court through counsel KC Mittal after he was denied the claim on the grounds that he could not claim within two years of the commencement of policy.
Mr Mittal argued before the Court that LIC’s decision was arbitrary as his client was not told about such a condition at the time of making the policy.
According to Mr Khosla, he took a Jeevan Kishore policy for his 11-year-old daughter for a sum of Rs1 lakh in October 1994 for a yearly premium of Rs5,533.
In September 1996, his daughter died and the payment of premium was stopped thereafter.