DoT finalises basic services

NEW DELHI, July 4: Concluding all discussions on the Licence Agreement for basic services, the DoT has finalised the draft of the Tripartit...

NEW DELHI, July 4: Concluding all discussions on the Licence Agreement for basic services, the DoT has finalised the draft of the Tripartite Agreement which will now be sent to the Union Finance Ministry for its final approval. Apart from this, the DoT is also preparing a formal Cabinet Note for obtaining Cabinet clearance to the assignability of basic service licences.

Following three meetings with basic service operators, the DoT has finally frozen all discussion on the Licence Agreement and is likely to give six weeks time to holders of Letters of Intent to sign the final agreement.The DoT was under severe pressure from the Prime Minister8217;s Office and the Cabinet to resolve the problems dogging the privatisation of basic services which has been hanging fire for the last two years. So far out of the eight circles for which Letters of Intent have been handed out, only two companies, Reliance and Bharti Enterprises have so far actually signed the Licence Agreement.

The final Licence Agreement states that quot;with a view to help facilitating the financing of telecom projects, assignment becomes permissible and the licence is endorsed in favour of the asignee.quot;

Under the Tripartite agreement which forms a major part of the Licence Agreement, lenders can seek for the right to assignment in the event of default on payment of dues to the Licensor which in this case is the DoT or in the event of default of any two instalments of principal or interest or both by the lenders to the licence holders. The agreement further states the assignability right could also be exercised in the event of any major breach of terms concerning the telecom project which can seriously affect the ability of the licensee to meet its payment obligations to the lenders or the DoT.

Specifying the lenders8217; rights in the event of default, the agreement states that if within 30 fays of the evnt of an occurence of default, the licensee fails or is unable to remedy the situation, the lenders would be allowed to negotiate either through private negotiations or public auction or through tendeing process for takeover and transfer of the assets and liabilities of the original licensee. These, however, the agreement states, should satisfy the networth and experience criteria and other technical and equity parameters. However, the DoT has also specifically reserved the right to approve the quot;selecteequot; chosen by the lender after the original licensee has defaulted.

The Agreement further states that the terms and conditions for transfer of the netwrok and project of the original licence holder which is the crucial part fo the security offered to the lenders, shall be referred to the DoT within six months from the occurence of the default and at least two months prior to the anticipated takeover.

In the case of the DoT deciding to terminate licences, the DoT has undertaken to inform lender prior to the decision to revoke licences warning the lender to try to sort out the basic problems which might lead to the termination of the parties licence.

Story continues below this ad

With this, sources in the DoT state that the negotiation phase has come to an end and basic services should now take off.

Amount agreed is Rs 54,000 per port or the grade rates given by DoT.

The choice left to operator.

DoT to speed up frequency spectrum allocation and SCFA clearance.

No need for advance deposit of interconnection charge.

Relaxation in fixing actual date of licence for fee calculation, penalty

Story continues below this ad

DoT to pursue with MoF on infrastructure stats and tax holiday.

No more talks on interconnect, tripartite and licence agreement.

Carriage of cellular traffic to basic operators only within states.

STD and ISD calls not to be allowed to be carried.