Those of existing cellular players, those of basic players who will offer limited mobility, and finally, the fourth operators who are interested in entering the cellular sector.

First things first: the unanimous opinion among analysts is that valuations of existing cellular companies will continue to head south. Mr Sanjay Chhabaria, telecom analyst with Smifs Securities Limited is categorical: "The current scenario will impact the valuations of cellular companies on the negative side."

The debacle began even before the government accepted the TRAI recommendations. BPL which was interested in buying out RPG's stake in the Chennai cellular circle has indicated that the earlier valuation of $200 million is not acceptable as of now. Hutchison Whampoa, the second bidder which had pegged the value at $150 million, now seems lukewarm to the deal. Even the Koshika-Hutchison and Koshika-Escotel deals, for the UP (West) and UP (East) circles, which were near fructification, barely two months ago, have now fallen through, according to both Escotel and Hutchison officials.The reason is that in the current policy scenario, nearly all the factors which drive valuations-the number of subscribers, the average revenues per user (ARPUs), the cost of customer acquisition (COCA)-are under negative pressure. Two factors which will be particularly impacted: the number of subscribers and the cost of acquiring them.

According to an analyst at Birla Sun Life: "Before NTP 99, due to high customs duty on equipment, cellular service was a very premium service. Lately, however, these companies were beefing up their networks to leverage on economies of scale. And so, the service was moving from being the premium to the mass market. Hence, most of the incremental growth for cellular companies was coming from lower end of the market with a typical customer with an average bill of Rs 1000-1500."

It is this addressible market, which is now expected to shrink, once the limited mobility service comes into effect with rock-bottom prices. "If this market moves away to the limited mobility service, even the remaining valuations for cellular companies definitely will be wiped out", adds the analyst from Birla Sun Life. At the other end, the cost of acquiring customers is also expected to increase due to the additional inputs as far as advertising and marketing are concerned.

The actual impact however, would be difficult to judge. Says Mr Chhabaria: "The actual gain or loss will depend on how many people actually adopt the limited mobility service and the quality of communication that it offers. How many subscribers would be willing to compromise on the quality?"Notwithstanding the doomsayers, some market watchers caution that the drop will not be as bad as anticipated. According to Mr Aditya Sanghi, associate director, M&A, Rabobank International, "Though there is going to be an affect on valuations, the impact is not going to be as great as is being made out."

He claimed this on the premise that there are several grey areas as of now. "Once the rentals for the limited mobility service are worked out there is expected to be a more equitible arrangement, which would probably even out the pitch. Further, there are issues of the cost of the terminal/ handset for the WLL-based service."

Either ways, its the basic operators who are expected to benefit from what one of the leading basic operators calls the "sex appeal of limited mobility." Most analysts agree that the valuations of basic service providers are expected to improve, concomitantly with the provision of WLL-based mobility. The big gainers from the stock market perspective, according to Mr Chhabaria, are Hughes Telecom and Mahanagar Telephone Nigam Limited (MTNL), while Bharti Telenet, Reliance Telecom, Himachal Futuristic Communications Limited, Tata Teleservices, and Shyam Telecom, too will benefit.

Ultimately, as Mr Sudarshan Banerjee, CEO, Essar said: "The dip in valuations will not affect the serious players in the industry." Perhaps. But it probably will sour a clutch of deals in the interim.