BANGALORE, India-It’s a difficult time for some cellular operators in India. The Department of Telecomunications (DoT) has terminated the cellular licenses and radio frequency licenses of a few operators in India for nonpayment of license fees.
The circles that have been affected are Koshika Telecom’s service in Uttar Pradesh (West), Bihar and Orissa; and Aircel Digilink’s service in Rajasthan and Haryana. Koshika owes the government 3.75 billion rupees (US$86 million) in outstanding license fees, while Aircel owes about 2.05 billion rupees (US$47 million). The DoT has cashed the 871 million rupee (US$20 million) bank guarantee of Koshika.
Although the DoT disconnected Essar Cellphone’s connectivity in Punjab circle, the carrier reportedly made some arrangements with DoT.
The regulator has not taken action against another defaulter-JT Mobiles, the cellular licensee in Karnataka and Andhra Pradesh-because the company has filed a case in the Delhi High Court against DoT, citing DoT delays in giving regulatory and frequency clearances. A few other operators have also approached the court.
Industry sources said the DoT action followed petitions filed by Koshika subscribers that sought to block the anticipated termination of the carrier’s license. Sources also said termination of the licenses could lead to demands for compensation, based on the opinion of the attorney general concerning the migration of operators to the revenue-sharing regime.
The ailing operators may get a fresh lease on life through the government’s decision to allow private telecom operators to migrate to a revenue-sharing regime. Under the revenue-sharing plan, telecom service providers will have to share a portion of their revenues with the DoT instead of paying license fees.
Under the existing license-fee regime, cash flows for the government are only notional because a large number of players have not been paying their dues on time. The number of defaults will only increase with time, likely leading to repeat tendering processes and prolonged legal battles.
The High Court has given conditional approval for the new policy and revenue-sharing regime, with a condition that the package be evaluated by the new Parliament and government after the general election in October.
The DoT has offered a bailout package to cellular operators for shifting to the new regime. However, Koshika and Aircel Digilink are not eligible for the bailout package for the circles in which their licenses were terminated.
As a pre-condition to switching to the new payment system, DoT will ask the operators to withdraw all their court cases against the agency.
More details of the new telecom policy and revenue-sharing regime will be included in the India Focus in the October issue of Global Wireless.
