Reliance, BT extension to be referred to AG

NEW DELHI, AUG 18: The Department of Telecommunications (DoT) is likely to refer the issue of a six-month extension for two companies -- ...

NEW DELHI, AUG 18: The Department of Telecommunications (DoT) is likely to refer the issue of a six-month extension for two companies — Reliance for their basic services circle in Gujarat and Bharti Telenet’s (BT) basic services project in Madhya Pradesh — to the Attorney General (AG) for his advice. This has become necessary as both these companies have already got an extension — from February 1997 to September 1997, and under the New Telecom Policy of 1999 (NTP ’99) any further extension cannot be granted.

Both companies have now demanded the extension on the grounds that they cannot be penalised for signing the licence agreements for their circles in advance before other companies. A six-month extension for Reliance works out to around Rs 50 crore while in the case of Bharti it is around Rs 9 crore.

Under the NTP ’99, as per the AG’s opinion, any company which has got an adjustment in its effective date once will not be eligible for any further extension of six months which has been given to allcellphone and basic service companies. This, these companies have alleged, is unfair as the earlier extension is not something they had asked for and in any case was given because the Government was still drafting the licence agreements.

Bharti and Reliance had signed their basic service letters of intent (LoI) in February, 1997 when the Government was still drafting a detailed licence agreement incorporating the assignation clause and tripartite agreements as demanded by the industry as a pre-requisite for funding their projects.

The companies had at that stage given in writing to the Government that as a result of their signing the LoI earlier, they should not be discriminated against any reliefs accruing to the other operators in the industry. The telecom department at that stage had given this assurance to the company and later when four other companies signed their licences on September 30, 1997, the effective date for the licence for all the six companies was to be counted from thatdate.

According to sources, the telecom department in any case has not added the Rs 55 crore for Reliance and Rs 9e crore for Bharti Telenet, in their Rs 1,443-crore concessions that has resulted out of the six-month extension. This extension was given to companies across the board as several of them had filed arbitration suits against the Government for delays in various clearances to them.

Bharti Telenet has written to DoT in the past about the delays caused to them owing to delays from the Ministry of Surface Transport (MoST) in digging alongside roads as well as several other delays.

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Reliance had a licence fee obligation of Rs 97 crore annually for the first five years while Bharti had a commitment of around Rs 19 crore annually for the first five years.