Koshika pays Rs 100 cr licence fee dues

DoT was also believed to be unhappy with the company for negotiating sale of a portion of its equity to Hutchison and Escotel for a huge sum of money to clear the licence fee dues though Koshika now says that it has dropped plans to bring in a partner as the funds have been tied up with FIs and banks.

As reported in this paper earlier, DoT officials were of the view that instead of letting the company sell a stake at a premium, its licence should be cancelled and fresh bids called for all its circles.

Koshika, on the other hand, does not foresee any problems now. Koshika chairman Vinay Rai, when contacted, confirmed that a Rs 100-crore cheque was given to DoT on Friday.

“We have made an upfront payment of Rs 100 crore to show our good intentions of clearing all the dues. The financial institutions and banks, with which the balance amount of Rs 360 crore has been tied up, will advance the money against assignability of the licences, as per the standard practice of DoT,” he said. Of the Rs 460 crore it owes to DoT, over Rs 150 crore is on account of interest and penal interest alone.

Koshika hopes to sign the tripartite agreement with DoT and the FIs and banks for assignability of the licences in the next two to three weeks. IDBI, General Insurance Corporation, Life Insurance Corporation and Rabo Bank International are among the FIs and banks which have been lending Rs 460 crore to Koshika.

Sources said Koshika now plans to privately place equity with strategic investors, instead of telecom companies, for expansion of its service in Uttar Pradesh (east and west) circles.

Koshika was providing cellular services in UP (east and west), Bihar and and Orissa but three of the licences except UP (east) were cancelled due non-payment of licence fee. The company was permitted to continue with its service in UP (east) only because Aircell Digilink, the other operator in the circle, had also defaulted on fee payment.

Koshika’s total debt burden stands at over Rs 650 crore. The company has an equity base of Rs 400 crore of which promoters hold 99.99 per cent.

Koshika plans to become a debt-free company within a year by utilising the money to be raised from strategic equity investors for repayment of loans to FIs and banks.

The company is expected to go in for a de-merger or create subsidiaries to run operations of each circle independently. This will enable it to raise funds for UP (east and west) circles as investors are wary of putting money in the Bihar and Orissa circles.

The government in March permitted Koshika and Aircell Digilink to migrate to the new telecom policy (NTP-99) after the two companies accepted the migration package unconditionally.