The department of telecommunications (DoT) has asked the sector regulator to examine if licences for telecom services for companies like Vodafone and Bharti Airtel can be extended without fresh auctions. This is significant as the companies have moved the courts challenging the government on the subject.
A government source said on Friday the issues which the Telecom Regulatory Authority of India (Trai) will look into is the validity of the claim made by these companies that they need not bid for rights to extend their licences beyond 20 years. Vodafone India,for example,has moved the Delhi High Court challenging the decision of the DoT for not extending its licences for Mumbai,Delhi and Kolkata.
Bharti Airtel too has done the same for Delhi and Kolkata while Loop Mobile is seeking extension of its Mumbai licence. These companies claim that the National Telecom Policy of 1999 provided for the extension and continuity of licences beyond the 20-year period for which the government then gave them licences. Since the licenses for the 22 national circles were given on different dates with gaps of often more than a year,the renewal dates vary. In the case of Vodafone three licences come up for renewal in November 2014. The rules say companies must apply for their renewal,a year ahead.
While Vodafone had filed applications for extension of licences for the three metro circles with the government in December 2012,it has been rejected. Vodafone has said this is unfair and is constrained to take the legal recourse by challenging (the) arbitrary rejection of its extension applications as this matter can potentially cause grave inconvenience to millions of customers in these 3 circles.
Referring the issues at this juncture to the Trai opens up the possibility that the government may be considering an out of court settlement with the companies. All of them operate on the 900 Mhz frequency in each circle while the government has plans to refarm it at a higher price. A plethora of issues in the sector is being fought in court,which has hurt investments.