Govt opens STD lock for private companies

Detailed guidelines of the new policy were announced by Communications Minister Ram Vilas Paswan here today. According to the new policy, a company whose promoters together have a networth of Rs 2,500 crore and a paid-up equity of Rs 250 crore, will be eligible for becoming NLD operators.

But if you thought that the Department of Telecommunications DoT will not have a role to play, you were wrong. Companies interested in entering the NLD services would have to first apply to the DoT. The applications would then be processed by the DoT which 8220;so far as practicable8221; would decide within 15 days whether the company fulfilled the prescribed norms and the company would be informed.

Eligible companies would then have to pay Rs 100 crore as a one-time cash-entry fee. Apart from this, it would have to pay bank guarantees worth Rs 400 crore which would be refundable in four tranches, as the company fulfils its network roll-out plans in four phases.

Companies would also have to pay licence fees to the government based on a revenue-share agreement which will have a cap of 15 per cent. This revenue share would include one part which will go directly to the government while the other part will be a contribution to the Universal Service Obligation USO fund through which communication links will be built in the unremunerative rural sector and inaccessible far-flung areas.

The licence granted to NLDOs would be for a period of 20 years extendable for another 10 years at a time. The government has kept a maximum foreign equity cap of 49 per cent including the NRI and OCB overseas commercial borrowings route.

While the new policy will allow free competition among NLDOs for all calls made from one state to another inter-circle calls, for calls within a state intra circle, operators would have to have individual agreements with basic service operators here.

This could be the biggest grey area. So far, there are only six private basic service operators running landline phone services in states. In all other states, the government-owned Department of Telecom Operations DTO runs basic service operations and private NLD operators would be at the mercy of the DTO for accessing consumers directly for intra-circle calls. Incidentally, the DTO had been resisting the opening up of intra-circle STD calls to competition as this formed 45 to 50 per cent of the total annual STD call market of Rs 12,000 crore.

The new policy has also created two categories of infrastructure providers. The first category will consist of those operators who will physically lay cables for the telecom network 8212; these operators will only register themselves with the DoT but will not have to pay any licence fee. The second category will consist of bandwidth providers who will pay licence fees through a revenue share to the government but no entry fee.

HIGHLIGHTS

Unrestricted entry for companies in the field of STD services
Free competition for companies in inter-state STD calls, some riders for intra-state STD calls
Licence for a period of 20 years extendable by 10 years at a time
Companies should have networth of Rs 2,500 crore and a paid-up equity capital of Rs 250 crore
Foreign equity cap of 49 per cent
Companies to pay licence fees to government up to a maximum of 15 per cent of revenues