To discourage non-serious players from entering the telecom sector, the Telecom Regulatory Authority of India (Trai) has proposed a lock-in period in the form of rollout obligations for companies granted fresh licences from mergers and acquisitions. These companies would also not be entitled to participate in any auction for spectrum unless they meet the rollout obligations enunciated in the licence conditions.
In an interview with FE, Trai chairman Nripendra Misra said that ?in order to discourage non-serious players, the authority has recommended that a new service provider has to ensure that in metros, 90% of the service area is covered within one year and in telecom circles at least 10% of district headquarters will be covered in the first year and 50% within three years of effective date of licence?.
Misra said, ?All these measures will dissuade non-serious players and ensure that such players do not get unearned gains.?
A department of telecommunications (DoT) official told FE that the government would accept the recommendations and they apply to all licensees currently in the queue for fresh licences. At present, licence conditions do not place any such bar on companies for any merger or acquisition.
The acceptance of the proposal would mean that any company obtaining a fresh licence would first have to invest in creating and rolling out networks in the circles for which licences have been granted before it can firm up any plans for a sell-off.
For a unified access service licence (UASL) for all the 22 circles in which the telecom circles are split, a company has to fork out around Rs 1,500 crore. According to rough industry estimates, an investment of Rs 300-500 crore per circle is required just to make one?s presence felt. This means that a company getting a licence for all the 22 circles would have to make initial investments of Rs 8,000 crore.
Earlier pending licence applications with DoT include those of HFCL for 21 circles, Spice for 20 circles, Bycell for five circles, and Cheetah for two circles. The most recent applications have been from real estate major Parsvnath, which has applied for 22 circles and the Ruias of Essar, who control Mumbai-based BPL Mobile, for licences in 21 circles.