S Tel About To Shut Shop. 2G Fiasco’s First Victim?

The 2G Scam has claimed its first victim; S Tel has decided to terminate operations due to “unviability” of the business.

Economic Times newspaper, citing a company source has confirmed that S Tel will have to down shutters owing to the Govt. of India cancelling 2G Licenses & forcing Mobile Operators to bid in a fresh round of auctions under the New Telecom Policy. The Supreme court recently ordered all 122 licenses issued under a scandal-tainted 2008 sale be revoked within four months.

While other companies are gearing up for fresh round of bidding, S Tel is forced to think about survival since its infrastructure support companies & investors have apparently intensified disconnection of services. This has raised the fears “that there is now no chance of the banks disbursing funds” confirmed S Tel in a statement.

Bahrain Telecommunications Co, one of the major stake holders will be the first foreign operator to exit the Indian Mobile scene after the verdict. The stake will be sold to its Indian partner, Sky City Foundation Ltd, for the same amount they were bought in 2009, i.e. for US$ 175 Million. S Tel is not a major player with only 3.6 Million customers.

However, it does operate in the Tier II & III towns that are smaller telecoms zones & had recently secured 3G spectrum for 3 Zones as well.

The Government has simply chosen to wipe the slate clean & cancel all the license, but we don’t think they must have given a thought to the people who will suffer because of disconnections! Companies like S Tel have surely set a precedence for others by taking care of its flock even while it is going under. How S Tel will manage the transition is a big question on which the company has chosen to remain mum. With plans & tariffs differing wildly across operators, it sure has its work cut out. But with MNP, we don’t think customers might wait for S Tel to say where they go!

Would you wait for the company to get you a new service provider or jump the gun?

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