Cabinet to discuss telecom issue today

NEW DELHI, JUNE 28: Though the government has not yet been able to get the formal clearances for the telecom package from either the fina...

NEW DELHI, JUNE 28: Though the government has not yet been able to get the formal clearances for the telecom package from either the finance or the law ministries, it has decided that the matter will definitely be placed before the Union Cabinet tomorrow. Papers for the issue will be circulated in the Cabinet meeting at noon itself. This was decided late this evening after a last-minute intervention by the Prime Minister8217;s Office PMO 8212; till late this afternoon, it was expected that telecom would be discussed only on Friday. A discussion on the telecom case has now been added to the supplementary agenda for tomorrow8217;s meeting.

The PMO, which is actively pursuing the case, is believed to have pointed out that there was no reason to delay the matter since the Attorney General had opined in its favour, and that both the law and finance ministers had indicated their broad agreement with the new revenue-sharing agreement.

It is understood that a clearance was given by the Finance Ministry late on Saturday.The ticklish matter of revenue implications was also sorted out. It was pointed out that while the budget had made a provision for an inflow of Rs 1,800 crore this year, thanks to former Communication minister Jagmohan8217;s threats, the government had already got Rs 800 crore. As for the rest, once the new revenue-sharing package is approved, more funds will come in from the operators who are keen on continuing their services.

It is understood that the government will relax the proviso relating to the lock-in period of equity. The Attorney General had opined that promoters be forced to lock-in to their existing equity structure for a period of five years from the effective date of their license. The idea of this proviso was that, once revenue-sharing was allowed, companies would benefit tremendously and that promoters would want to cash in on this immediately. The companies, however, have been arguing that if they are not allowed to divest some of their equity, they will never be able to raise the funds theyneed to, to pay off their existing dues. This is what the Law Ministry has to clear now.