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New Delhi, Sept 18: Communications minister Sushma Swaraj on Friday extended the licence period for cellular operators from 10 to 15 years, terms and conditions for which would be finalised by the Telecom Regulatory Authority of India (Trai). For the present, however, cellular companies will have to pay the licence fee as scheduled for the 10 years as per the existing licence conditions. The minister was addressing the Economic Editors' conference in the capital on Friday.
The cabinet took the decision to extend the licence period for operators in non-metro circles from 10 to 15 years, meeting a long-standing demand. The operators' other demand for a two-year moratorium in the payment of licence fees, however, was not discussed since five of the 13 operators did not comply with the licence-agreement conditions, the minister said.
The operators reacted positively, though cautiously, to the fulfilment of their demand. The industry, however, feels there are many loose ends which Trai needs to tie up ifcellular ventures have to be made financially viable.
The industry representatives hoped that the financial institutions (FIs), who had gone public saying a 20-year period was just for the ventures' viability, will find the 15-year period long enough to take out their exposure in the companies. ``But the moot question is that if it still doesn't improve the situation, will the government be prepared to relent and extend it by another five years later?," one cellular operator asked.
Swaraj said the relief was being extended only to those operators who had complied with the terms and conditions of the licence agreement, which would imply clearing off all outstandings regarding the licence fees before the extension is granted to them. ``It will be extended only for non-defaulters and hence all operators have to make sure that they comply with the terms and conditions of licence agreements,'' the minister said. During the current year alone, cellular operators have chalked up outstandings worth Rs 800crore.
Swaraj also announced the termination of deemed deputation status for Mahanagar Telephone Nigam Ltd (MTNL) employees. All 60,000 C and D grade employees of the department of telecommunications (DoT) on deputation to MTNL at present will be permanently absorbed by the company.
On the government's inability to meet the phone-on-demand by 1997 as promised in the National Telecom Policy of 1994, Swaraj said: "Time has come for a review of the 1994 policy, and we will soon come out with a new telecom policy.''
The minister also announced the rent-free telephone facility for all retired employees of DoT with different slabs for free calls. Class A employees, who have completed 20 years of service, will be eligible for 1,000 free calls, class B-500 calls, Class C-300 calls and Class D-200 calls.
The government, she said, was gearing up to provide Internet nodes at all district headquarters, even as the Internet service providers' (ISPs') terms and conditions were being finalised for formalising bythe October first week.
Efforts were on to corporatise DoT, and all hurdles on the way would be cleared soon. ``There is resistance from the employees,'' she said, adding, they would be taken into confidence before taking any final decision.
The minister said the government would review the 1994 National Telecom Policy soon taking into account the recent technology changes.
Rescheduling loans will be easier
The government's move to extend the non-metro cellular telephony licence fee period to 15 years makes sense for several reasons. First, for most cellular circles, the licence fee payable over a period of 10 years almost constitutes 40 per cent of the total project cost. The fixed cost per subscriber been quite high initially, as a small subscriber base has contributed less for bearing licence fees, equipment costs, interest and developmental charges. Operating losses have to be funded for the initial four to five years. Second, rescheduling loans becomes much easier since loans to telecomprojects are usually of seven year maturity, and with the license for just ten years the cushion for rescheduling is low.
The government has not accepted the cellular operators demand for a two-year moratorium on payment of licence fee possibily because the budget has taken into account annual receipts of over Rs 2000 crore as licence fee from cellphone operators.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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