DoT may allow licence resale

NEW DELHI, DEC 26: Even as the DoT has toughened its stand on exempting the existing private basic service operators from paying licence f...

NEW DELHI, DEC 26: Even as the DoT has toughened its stand on exempting the existing private basic service operators from paying licence fees for the next four years, it is giving in to the market reality of mergers and acquisitions by supporting the resale of basic services licences. According to a senior DoT official, resale of licenses for basic service operators will be allowed.

According to a note dated December 19, which was prepared for the Full Telecom Commission meeting held on December 22, the DoT had proposed that: acirc;euro;oelig;The resale of licences may be permitted, subject to the fulfilling of entry conditions in respect of net worth, paid-up equity capital, and experience criteria.acirc;euro;trade;acirc;euro;trade; The DoT is of the view that in the existing scenario with mergers and acquisitions, it is very difficult to prevent the sale of licences. acirc;euro;oelig;Therefore, in keeping with market trends and status, resale may be permitted,acirc;euro; urged the note.Welcoming the change in policy, an HFCL official said: acirc;euro;oelig;It makes sense to allow basic operators to resell licences, because in any case, competition is unlimited.

If the Government had not allowed companies to resell licences, people would have been forced to just purchase facilities and acquire the licence from the Government.acirc;euro; Since the policy did not allow the resale of licences earlier, last year HFCL had invested in additional equity, as allowed under NTPacirc;euro;trade;99, to gain control of the Punjab licence, where it now operates basic services.

Meanwhile, the DoT has also decided not to exempt the existing basic service operators from paying licence fee for the next four years. According to the note, acirc;euro;oelig;In view of the various commitments in the court of law and Parliament and spirit of the licence, it may not be desirable to waive the licence fee even for a restricted period.acirc;euro;

It may be recalled that the TRAI had suggested that since the existing operators had to pay their licence fee dues as entry fee 8211; which was much more than the entry fee being stipulated for the new basic services players 8211; the existing operators should be exempted from giving licence fee for the next four years in the cases where the difference was more than Rs 100 crore.

The DoT also seems to have conceded to the industry demand of a level playing field between private and government-owned operators, by adding a conditionality clause to the reimbursement of licence fee to the BSNL and MTNL. acirc;euro;oelig;In view of the strong reservations expressed by the TRAI against reimbursement of licence fee to BSNL and MTNL,acirc;euro; the Telecom Commission as per the note, has proposed acirc;euro;oelig;to reimburse the licence fee to BSNL and MTNL, subject to fulfilling social and other obligation as stipulated by NTP 99 at the behest of the Government and not covered by the USO.acirc;euro;

Earlier, the DoT advocated a straightforward reimbursement of the licence fee paid by BSNL and MTNL for basic services. However, the TRAI had felt that this will be a acirc;euro;oelig;negation of the declared policy of the Government that the corporation will be allowed to operate on fully commercial linesacirc;euro; and was not in favour of any special treatment being given to MTNL and BSNL.

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Other important decisions taken by the Department of Telecommunication include, counting only the net worth of promoters having more than 10 per cent equity in the venture, while calculating the net worth of the companies wanting to enter into basic services. It also proposed that 10 per cent of required net worth may be stipulated as paid up equity capital requirement for the basic service applicants.